Press Release

JCR-VIS Assigns Preliminary Rating to the proposed Sukuk issue of Hascol Petroleum Limited

Karachi, November 06, 2015: JCR-VIS Credit Rating Company Ltd. (JCR-VIS) has assigned preliminary rating of ‘AA-’ (Double A Minus) to the proposed Sukuk issue of Rs. 2 billion (inclusive of a Green Shoe Option of Rs. 500 million) of Hascol Petroleum Limited (HPL). Outlook on the assigned rating is ‘Stable’. The preliminary rating will be converted to a final rating upon review of relevant signed legal documents.

The proposed Sukuk will have a tenor of 6 years (including 1 year grace period) and is planned to be utilized for meeting working capital requirements, funding expansion plans and retirement of existing high cost borrowing. The Company expects to be able to raise fresh funding at improved pricing, given the improvement in risk profile of the entity over time. The assigned rating draws strength from the security structure of the Sukuk which entails formation of a debt payment mechanism to progressively retain upcoming installment in an escrow account. Security structure also includes first pari passu charge over specific depots and retail outlets of the company inclusive of a margin of 25%.

The assigned entity ratings of ‘A+/A-1’ (Single A Plus/A-One) reflect healthy financial risk profile as evident from the company’s profitability and cash flow from operations in relation to outstanding obligations. Rating also incorporates growing market share of the company which has been achieved on the back of enhanced storage capacity and expanding distribution footprint, in line with the business plan earlier communicated by the management.

Going forward, projected growth in volumes over the next six years will allow sufficient cash flows for adequate debt servicing coverage. While debt levels will increase post Sukuk issuance, increase will be limited since a sizeable portion of the debt will be utilized for retiring high cost borrowing outstanding. Despite increase in debt levels, gearing and leverage indicators are expected to decline with projected growth in equity base.

For further information on this rating announcement, please contact the undersigned (Ext: 517) or Mr. Javed Callea (Ext: 501) at (021)35311861-70 or fax to (021) 35311872-3.

Jamal Abbas Zaidi
Deputy CEO

Applicable Rating Criteria: Oil & Gas Industry (February 2004)

Rating The Issue (September 2014)

Information herein was obtained from sources believed to be accurate and reliable; however, JCR-VIS Credit Rating Company Limited (JCR-VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. JCR-VIS, the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report. JCR-VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings. JCR-VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2015 JCR-VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to JCR-VIS.

JCR-VIS Credit Rating Company Limited