FW: MARC AFFIRMS ITS AAA(fg) RATING ON TRIPLC VENTURES' RM240 MILLION SENIOR MTN PROGRAMME

 

 

FOR IMMEDIATE RELEASE

 

MARC AFFIRMS ITS AAA_(fg) RATING ON TRIPLC VENTURES’ RM240 MILLION SENIOR MTN PROGRAMME

 

MARC has affirmed its AAA(fg) rating on TRIplc Ventures Sdn Bhd’s (TVSB) RM240 million Senior Medium-Term Notes (Senior MTN) Programme with a stable outlook. As at October 12, 2017, the total outstanding notes under the rated programme stood at RM200 million. The rating reflects the credit strength of an unconditional and irrevocable guarantee provided by Danajamin Nasional Berhad (Danajamin) on the Senior MTN obligations. Danajamin carries an insurer financial strength rating of AAA/stable from MARC.

 

Wholly owned by TRIplc Berhad, TVSB is the concessionaire of Universiti Teknologi MARA’s (UiTM) Zone 1 Phase 2 project in Puncak Alam, Selangor, which is currently in the fourth year of the maintenance phase following the project’s completion in April 2014. Under the concession agreement, TVSB is entitled to receive availability charges (AC) and maintenance charges (MC) payments from the project lessee, UiTM, throughout the 20-year maintenance phase. The AC payments are fixed at RM42.5 million per annum, while the MC payments are subject to review every five years and are conditional upon TVSB meeting specified key performance indicators.

 

TVSB’s standalone rating is contingent on the company’s ability to meet the performance requirement, which is largely moderated by the straight forward nature of the maintenance works. The standalone rating also hinges on timely payment receipts from UiTM. Principally funded by the Ministry of Higher Education, the university is to make the necessary payments within 30 days of submission of the relevant invoices, largely reducing counterparty risk in the transaction. Any concern on payment delay is addressed by the minimum required balance and the build-up mechanism of the debt service reserve account.

 

TVSB’s operations were within expectations during the financial year ended May 31, 2017. Despite a month’s delay in AC receipts due to administrative issues, the company’s operating cash flow was higher at RM42.2 million as the company did not have any outstanding payments to the project contractors. Following dividend payment of RM10 million, TVSB’s free cash flow was about RM32.1 million. The company began paring down its debt in the financial year with a principal repayment of RM20.0 million, followed by a second principal repayment of RM20.0 million on October 10, 2017.

 

Under the base case projections, pre-restricted distribution minimum and average debt service cover ratios (DSCR) of 1.84 times and 2.12 times respectively for the remaining tenure of the Senior MTN are expected to provide a moderate buffer for any underperformance by the operator, TRIplc FMS Sdn Bhd during the maintenance phase. Under break-even scenarios, TVSB’s cash flows can endure increases of up to 30% in maintenance costs and MC reductions of up to 6%. The rating agency highlights that the company has limited room to make restricted distribution (dividend and Junior Notes interest payments) based on the minimum and average post-restricted distribution DSCR of 1.51 times and 1.75 times respectively. Any liquidity risks are further addressed by the ability to defer the Junior Notes interest payments to the next scheduled payment date if the post-restricted distribution DSCR covenant is not met.

 

Downside risks in the project’s credit profile are mitigated by the presence of the unconditional and irrevocable guarantee provided by Danajamin. Any revision in TVSB’s rating and/or outlook would largely hinge on a revision in Danajamin’s credit strength.

 

Contacts: Adib Asilah, +603-2717 2943/ asilah@marc.com.my; David Lee, +603-2717 2955/ david@maarc.com.my.

 

November 20, 2017

 

 

[This announcement is available in the MARC corporate homepage at http://www.marc.com.my]

--- DISCLAIMER ---

This communication is provided by Malaysian Rating Corporation Berhad (MARC) on the basis of information believed by MARC to be accurate and reliable as derived from publicly available sources or provided by the rated entity or its agents. MARC, however, has not independently verified such information and makes no representation as to the accuracy or completeness of such information. Any assignment of a credit rating by MARC is solely to be construed as a statement of its opinion and not a statement of fact. A credit rating is not a recommendation to buy, sell, or hold any security.

 

© 2017 Malaysian Rating Corporation Berhad

 

 

IMPORTANT NOTICE:
The information contained in this email and/or any attachment hereto is strictly confidential and privileged. If you are not the intended recipient, and/or have received this email in error, you must not copy, disseminate or disclose the contents of this message and/or any attachment to any other person. Please notify the sender and delete this message and any attachment from your system. Malaysian Rating Corporation Berhad (“MARC”) accepts no liability in respect of prohibited and unauthorised use by an unintended addressee or recipient. Any opinion, view or other information in this message and/or any attachment hereto which does not relate to the official business of MARC is that of the individual sender. Although this email and/or any attachment is believed to be free of any virus or other defect which may affect any computer system into which it is received and opened, it is the responsibility of the recipient to ensure that it is virus-free and MARC accepts no responsibility for any loss or damage arising in any way from the use thereof.