Lahore, June 10, 2019 (PPI-OT): The rating reflects the Company’s association with Mega and Forbes Group of Companies, an established group with presence in shipping, logistics, real estate development, cement, energy and food sectors. Mega Conglomerate (Mega) operates under a holding company structure with an aim to acquire and consolidate some of the group’s investments in energy, real estate and food sectors. The rating incorporates the Company’s sizeable holding in The Hub Power Company and stake in Haleeb Foods (through Mega Foods (Pvt.) Limited formerly called VMFG (Pvt.) Ltd.) and investment property (through Imperial Developers and Builders (Pvt.) Ltd.).
The Company primarily drives its income from dividend stream of underlying investments. The profitability remains under pressure due to high interest expense emanating from debt acquired for financing the investment portfolio. Mega has substantial debt on its balance sheet. However, this debt is fully backed by liquid investments and securities including HUBCO shares, TDRs, and TFCs. Mega intends to issue a short term Sukuk to alleviate liquidity pressure and subsequently substitute the same through a long term Sukuk. The rating draws comfort from built in covenants for timely Sukuk payment including commitment from the Company to have sufficient liquid investment on the balance sheet at the time of repayment.
The rating is dependent on timely and successful issuance of short term Sukuk and, subsequently, a long term Sukuk to re-profile the debt to improve the Company’s liquidity position. Adherence to agreed covenants and maintenance of adequate resources for repayment remains critical.
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