PACRA Assigns Preliminary Rating to TPL Trakker Limited – Sukuk

Lahore, December 23, 2020 (PPI-OT): The ratings incorporate TPL Trakker’s prominent position in Pakistan’s tracking industry, emanating from its multifaceted product portfolio and sanguine technology infrastructure. As diversity becomes inevitable to sustain in its operating segment, the Company is gradually shifting towards business avenues that are more beneficial for company’s growth; the new segments have started to play their role however, incremental yet consistent cash flows remain pivotal. Recent developments precisely include acquisition of majority stake of Trakker Middle East LLC, and merger of TPL Maps and TPL Rupiya into TPL Trakker.

Post-merger, the mapping division and locations based Services (LBS) have already started achieving above-par results. Moreover, as per the Company’s plan, the process of going listed has been successfully completed – oversubscribed by 14.6% – hence, now stands as a public listed company from Aug’20. Underpinning the IPO, which got slightly delayed from its planned timeline, is the Privately Placed Commercial Paper (PPCP) which is providently redeemed and 20% remaining is deferred till Jan’21 under the SECP’s Relief Package.

The Company will soon be adding another Sukuk to its liquid profile, however, most of the Company’s financial obligations have been deferred, including Sukuk (PKR 600mln), therefore diluting the pressure in the shorter horizon. The Company still faces the pressure of high finance cost on account of its leveraged book, resulting in persistent bottomline losses in 3MFY21. The situation accumulates the impact of COVID-19 pandemic in the country which has led to severe economic disruption and demand deceleration. Currently, the Company’s financial risk profile exhibits a sigh of relief at all fronts; interest and debt coverages alongside capital structure and cash conversion cycles, endurance of which is necessitated.

The ratings are dependent upon the strength of the underlying security of the instrument. The instrument is secured through a tiered security structure. Apart from the ‘Hypo’ charges, additional charge is placed on the TPL Corp Limited’s long term investment of upto PKR 1500mln(~17M ordinary shares of TPL Insurance Limited and 100M ordinary shares of TPL Life Insurance Limited). In addition to this, specific comfort to the assigned ratings is being drawn from the inclusion of pre default mechanism, comprising a facility payment account and facility service reserve account in which one instalment will be maintained though out the term.

For more information, contact:
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com

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