Karachi October 07, 2016: JCR-VIS Credit Rating Company (JCR-VIS) has assigned entity ratings of “A-/A-2” (Single A Minus/ A-Two) to PGP Consortium Limited (PGPC). Proposed Preference shares issue of PGPC has been assigned preliminary rating of ‘BBB’ (Triple B). Proposed sukuk issue has been assigned preliminary rating of ‘A’ (Single A).Outlook on the assigned ratings is ‘Stable’. Preliminary ratings will be converted to a final rating upon review of relevant signed legal documents.
PGPC is establishing the country’s second Liquefied Natural Gas (LNG) import terminal utilizing a new-build Floating Storage and Regasification Unit (FSRU) with a regasification capacity of 750mmcfd. Pakistan LNG Terminals Limited (PLTL), a wholly owned subsidiary of Government Holdings (Private) Limited, has guaranteed purchase of 600mmscfd regasification capacity and shall pay a capacity fee, subject to certain performance benchmarks, calculated on a daily basis irrespective of the LNG volumes regasified; a key rating factor. The capacity purchase commitment is secured through a revolving Standby Letter of Credit (SBLC) covering three months of capacity payments. The ratings also take into accountsound performance track record of internationally known companies engaged for project development and operations.
PGPC is wholly owned by Pakistan GasPort Limited (PGPL), an associate of Jamshoro Joint Venture Limited (JJVL) which has experience in executing energy sectorprojects. The ordinary equity of PGPL has been contributed by JJVL and other prominent investors. The total project cost is estimated at Rs. 14.3billion and will be funded on a debt-to-equity ratio of 60:40. The equity portion of the project cost will be split into common and preference shares. The debt potion will be arranged by issuing privately placed Sukuk. Preference shares offer dividend at 6 months KIBOR plus 5.5% per annum.
The main source of revenue generation is tariff received from PLTL for LNG storage and regassification. PGPC alsointendsto utilize the excess capacity of the terminal to import LNG and sell RLNG to private sector parties pursuant to LNG Policy of 2011. The debt repayment capacity of PGPC is expected to remain comfortable with the debt service coverage ratio maintained over 1.2 throughout the debt tenure.
For further information on this rating announcement, please contact the undersigned (Ext: 234) or Mr. Mohammed Khalid Ali (Ext: 241) at (021)35311861-70 or fax to (021) 35311872-3.
Applicable Rating Criterion: Industrial Corporate (May 2016)
Preference Shares (Feb2003)
Notching the issue (June 2016)
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