VIS Assigns Initial Ratings to OBS Pakistan (Private) Limited - Press Release issued by VIS Credit Rating Company Limited.

Karachi -- September 29, 2022 (PPI-OT)

Following is the text of press release issued by VIS Credit Rating Company Limited

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VIS Credit Rating Company Ltd. (VIS) has assigned initial entity ratings of 'A/A-2' (Single A /A-Two) to OBS Pakistan (Private) Limited (OBS-Pak) and preliminary rating of A+ (Single A plus) to the proposed Sukuk issue of Rs. 5b. Long-term rating of 'A' signifies good credit quality with adequate protection factors. Risk may vary slightly from time to time because of economic conditions. The short-term rating of 'A-2' denotes good certainty of timely payments coupled with sound liquidity and company fundamentals. Outlook on the assigned ratings is 'Stable'.

OBS Pakistan (Private) Limited (OBS-Pak) has entered into an agreement with Viatris Inc. and Pfizer Inc. to acquire 18 pharmaceutical brands (25 active SKUs) which were currently being marketed by Pfizer Pakistan Limited. The capital requirements for this acquisition has been estimated at Rs. 13.33b which will be financed through a 75:25 Debt: Equity ratio. The acquisition is being conducted through OBS-Pak, a Special Purpose Company (SPV) which will be a subsidiary (85%) of AGP Limited (AGP).

Assigned ratings take comfort from the Parent Company's (AGP) established market position, long track record in the pharmaceutical industry and the resulting operational, managerial and financial support available to OBS Pakistan (Both from AGP and projected cash available at the holding Company level). Furthermore, business risk profile is supported by non-cyclical nature of the industry and steady demand growth.

The company intends to raise up to Rs. 5.0b for the acquisition through a Sukuk issue having a tenor of 6 years (including 18 months grace period). Principal amount will be redeemed through eighteen consecutive, fixed, quarterly installments with quarterly profit payment frequency. Security structure of the Sukuk entails exclusive hypothecation charge on future fixed assets of OBS-Pak, shares of AGP, Corporate Guarantee from AGP for the...