The Pakistan Credit Rating Agency Limited
Press Release
a

Rating Action
Lahore: (17-February-2006)
   

PACRA Maintains Ratings of WorldCALL Communications Limited and Places Them on RatingWatch Positive

 

 
Analyst
Muhammad Usman
(+92-42-586 9504)
musman@pacra.com

 

 

 









 

 

 



 

 

 

 

 

 

 

 

 

 

Disclaimer
This press release is transmitted to you for this sole purpose of dissemination through your newspaper/magazine/agency. The press release may be used by you in full or in part without changing the meaning or context thereof but with due credit to PACRA. However, PACRA has the sole right of distribution of its press releases for consideration or otherwise through any media.

  

The Pakistan Credit Rating Agency (PACRA) has maintained the long-term and short-term entity ratings of WorldCALL Communications Limited (WCL) at “A+” (single A plus) and “A1” (A one), respectively. These ratings denote a low expectation of credit risk.

PACRA has assigned a rating of “AA-” (double A minus) to the proposed second secured TFC issue of PKR 350mln by WCL, while maintaining the rating of first secured TFC issue of PKR 350mln at “AA-” (double A minus). These ratings denote a very low expectation of credit risk and very strong capacity for timely payment of financial commitments.

The ratings reflect WCL’s stable cash flow generation and sound coverages. The ratings are placed on the Rating Watch Positive pending the implementation of the proposed merger of four WorldCALL group communication sector entities including WCL into WorldCALL Telecom Limited (WTL). The positive implication is in recognition of the strong potential of the new company to manage the business risk, while maintaining a low leveraged capital structure thereby minimizing the financial risk. The merged company’s performance prospects are likely to improve owing to a diversified product range supported by the requisite infrastructure in addition to cost efficiencies, tax benefits and operational synergies.

About the company: WorldCALL/First Capital group, entering the communication sector in 1995 through WCL, has ventured into its various dimensions through different companies. Recently, the group has initiated the merger of WCL, WorldCALL Multimedia Limited and WorldCALL Broadband Limited into WTL. The merged entity would have diversified businesses namely, a) telephony using WLL network, b) payphones c) broadband network in Karachi and Lahore providing cable TV, internet, telephony and interconnectivity services, d) LDI services, and e) calling cards.

About the TFC issue: WCL issued its first secured TFCs of PKR 350mln during September 2002 for a tenor of 5 years. The profit payment is based on SBP discount rate plus 175bps with a floor of 12.25% and a cap of 16.25%. Principal redemption is in seven equal semi-annual installments, which commenced from September 2004. The instrument is secured by a first pari passu hypothecation charge of PKR 437.5mln on the present and future fixed assets of the company. WCL is planning to issue the second secured TFCs issue of PKR 350mln during FY06. The tenor of the instrument would be 5 years carrying profit based on 6month KIBOR plus 275bps. Principal redemption would be in six equal semi-annual instalments beginning after a grace period of 2 years. The issuer will have call option exercisable after 2 years of issuance. The instrument would be secured by way of a first pari passu charge over specific present and future fixed assets of the payphone and prepaid calling card projects with a 25% margin.
 
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