AsiaNet-Pakistan Premier Editorial Content and Press Release Distribution Service
Lahore, June 28, 2019 (PPI-OT): MORE – a wholly owned subsidiary of Frontier Works Organization (FWO) – is specifically established for overlay and modernization of Lahore-Islamabad Motorway (M-2). The project is assigned by National Highway Authority on a Build-Operate-Transfer (BOT) basis for 20 years (beginning Apr-14). The construction phase comprised initial two years encompassing overlay and major rehabilitation work which was completed ahead of projected timeline in Aug-16.
The business profile of the company continued to remain good due to 1) revenues emanating from good traffic volume, 2) toll revenues subject to annual rate increase guaranteed by NHA, 3) income from ancillary services. The growth in traffic volume was higher in initial years of operational phase. Establishment of separate toll plazas and major rehabilitation work has been completed.
Payments to NHA, as per the agreement, are being done through cashflows emanating from business. The financial risk profile is expected to be managed with net cumulative cashflows providing adequate service coverage. Increasing interest rate environment and stepped up principal repayments in upcoming years are key factors that may impact financial risk profile. The ratings recognize and incorporates strong financial muscle of sponsor.
Positive outlook captures the sustained improvement in the liquidity of the company, continuity of the same will be considered positive. Meanwhile, any material reduction in traffic volumes thereby impacting overall revenues and related cashflows will have negative rating implication.
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