The Pakistan Credit Rating Agency Limited
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Uswa Sikandar

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PACRA Assigns Initial Rating to Cnergyico Pk Limited | PP Sukuk | TBI

Rating Type Debt Instrument
(27-Dec-21 )
Action Preliminary
Long Term A
Short Term -
Outlook Stable
Rating Watch -

Cnergyico Pk Ltd (formerly "Byco Petroleum Pakistan Limited, herein referred to as “Cnergyico” or “the Company”") possesses a notable share in meeting the economy's demand for petroleum products, with its refinery and marketing business. The ratings are a reflection of Cnergyico's largest capacity, efficient processes that enable the company to effectively shield its business profile from external vulnerabilities. Improved performance indicators and promising financial discipline, are imperative to the ratings. The entity has been placed on Rating Watch to oversee challenges on the business and financial risk profile of the company, amongst others, related to industry dynamics. Cnergyico has booked net loss of PKR 674mln in 3MFY22 (FY21: PKR 3,596mln; FY20: PKR (2,431)mln). Cnergyico’s financial risk profile is well managed even in challenging position with essential borrowings to cater to working capital needs and also stands in range-bound. Nonetheless, Cnergyico stands out in embarking on a new strategic venture to upgrade its refinery process. The company is in advanced stages of acquisition of 57% shareholding in Puma Energy Pakistan with management control which will add approximate 550 retail stations along with two company owned terminals. The company is raising funding approx. PKR 7 billion via issuance of a privately placed sukuk. Part of these borrowing will be utilized for the acquisition of said shares. The rest will be utilized in upgradation of the refinery.
Rating incorporates comfort from the security structure of the transaction which is as follows:1) Debt Service Reserve Account ("DSRA") equivalent to the first redemption installment (principal + profit) when due to be maintained under lien of the Trustee throughout the Tenor of the facility. 2) A debt payment account ("DPA") to be maintained with lien mark of the Trustee which will be built up with 1/3 (one-third) of the installment (principal plus profit) each month by the 15th such that the entire upcoming installment is deposited in the DPA by the 15th day of 3rd month. 3)First pari-passu hypothecation charge over all the present and future movable fixed assets of the issuer, with a 25% margin.

About the Entity
Cnergyico, incorporated in 1995, is listed on the Pakistan Stock Exchange. It is engaged in the manufacturing, production, and sale of a large range of petroleum products via its refinery and marketing segments. The refinery complex of the company comprises two refineries. With the aggregate designed capacity of ~155,000 barrels per day. The company is a subsidiary of Cnergyico Mu Incorporated (CMI) Mauritius, which currently holds 69.83% shares in the company after sale of 22% shares by IGCF Oil & Gas Limited (formerly Abraaj Mauritius Oil & Gas Limited). Mr. Amir Abbassciy is the CEO of Cnergyico since Jan, 2017.

About the Instrument
Cnergyico is in process of issuing a privately-placed Sukuk of PKR 7,000mln (inclusive of green shoe option of PKR 2,000mln). The Sukuk, having an original tenor of 5 years (including a 2 year grace period), has quarterly coupon payments payable at 3-month KIBOR plus 2.20% - 2.50%. Redemption of the Sukuk is scheduled in 12 quarterly installments starting from 27 months from the issue date and subsequently every 3 months.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.