PACRA maintains the rating of TPL Corp Limited | PP Sukuk | Jun-22

TPL Corp Limited ("TPL Corp" or the "Company") operates as an effective holding company with a broad investment portfolio aligned with its strategic objectives. To fulfill the financing needs of its subsidiaries and associated companies, as well as to manage inter-company balances, the Company has secured debt through various financing arrangements. This approach ensures that TPL Corp effectively supports its investment strategy and maintains financial stability across its group entities. The rating of TPL Corp PP sukuk encapsulates the strength of its security structure. The Sukuk has a multi-layered protection mechanism that provides intrinsic mitigation against unforeseen risks. Sukuk is secured by way of shares of TPL Properties, shares of TPL Trakker, and TPL REIT units with a 30% margin to be maintained at all times. For the security purpose, additional shares of TPLI, TPLP, TPLT and TPL L are provided against the instruments. During CY24, units of REIT were also pledged. Now, the margin requirements are in compliance. The DPA is being held under exclusive lien for the benefit of the Participating Institution(s). DPA is being funded by a) the dividends from group companies, b) proceeds from the sale of Sponsor shares in TPL Trakker, and c) Right share issuance of the Company. The cash entrapment threshold for the proceeds from the sale of shares of TPL Trakker is two upcoming installments. Similarly, the cash entrapment threshold for the proceeds from Right Share issuance is three upcoming installments. As a last resort, the issuing agent has the right to liquidate the securities, in case, before the payment date, DPA is not funded, the issuing agent would initiate the process for the realization of the underlying security on an immediate basis. The maximum length of the cure period can be 15 days. The cure period availed would attract markup at the rate of 3MK + 250bps instead of the instrument's existing markup at the rate of 3MK +225bps. In addition to the above-stated security, the TPL Corp Sukuk and TFC are also secured by way of an insurance guarantee amounting to PKR 75mln each in favor of TFC and Sukuk holders. This guarantee would cover the quarterly interest payment of the PP Sukuk and PPTFC. With the sponsor's support, the Company has successfully repaid its first principal installment. The rating takes comfort from the demonstrated support of sponsors to provide support and raise funds.
The rating remains contingent on the successful repayment of the upcoming principal, along with adherence to the security structure and the timely fulfillment of margin requirements.

About the Entity
TPL Corp, formerly TPL Trakker, is a publicly listed company focused on investments in Group and other companies. Originally incorporated in Pakistan as a private limited company on December 4, 2008, it transitioned to a public company in 2009. The Company is led by Mr. Ali Jameel, the CEO, and supported by a team of seasoned professionals.

About the Instrument
TPL Corp have issued a Sukuk of ~PKR 2.19bln to contribute towards reprofiling of existing debt and acquisition of additional shares of group companies. Sukuk carries a markup of 3M KIBOR plus 2.25% per annum. Profit is being paid quarterly in arrears calculated on a 365 day year basis on the outstanding principal amount. Principal redemption began in Dec 2024, with first principal amounting PKR 365mln being successfully repaid on 23-Dec-24.