PACRA Assigns Preliminary Ratings to TPL Corp Limited - Privately Placed Term Finance Certificates of PKR 2,500 million - Press Release issued by The Pakistan Credit Rating Agency Limited.

Lahore -- December 01, 2021 (PPI-OT)

Following is the text of press release issued by The Pakistan Credit Rating Agency Limited (PACRA)

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The ratings encapsulate the strength of the security structure of Privately Placed Term Finance Certificates (PPTFCs). PPTFC has a multi-layered protection mechanism which provides intrinsic mitigation against unforeseen risk. PPTFC is secured against shares of TPL Properties, shares of TPL Insurance and shares of TPL Trakker with initial margin at 50% while required to maintain at least 30% at all times. The Company will establish and maintain the Debt Payment Accounts (DPA). The DPA will be held under exclusive lien for the benefit of the Participating Institution(s).

DPA will be funded by the dividends from group companies, proceeds from the sale of Sponsor shares in TPL Trakker, TPL Life Insurance and Right share issuance of the Company. The cash entrapment threshold for the proceeds from the sale of shares of TPL Trakker and TPL Life Insurance is two upcoming installments. Similarly, the cash entrapment threshold for the proceeds from Right Share issuance is three upcoming installments. The security structure of the instrument is further beefed up by the insurance guarantee which is indeed the first resort for the issue agent in case of non-payment risk is about to materialize.

This covers the first quarterly profit payments of upto c. PKR 76 mln each quarter. As last resort, the issue agent has the right to liquidate the shares, in case, before the payment date, DPA is not funded. In case the issuer does not...