PACRA Assigns Preliminary Rating to Select Technologies (Pvt.) Limited – Term Finance Facility – PKR 3.3bln | TBI

Select Technologies Limited (“Select”) is set to issue its first privately placed Islamic Term Finance Facility of PKR 3,300mln, forming the larger tranche of a PKR 4,764mln syndicated Islamic facility arranged by The Bank of Punjab, with PKR 1,464mln allocated to parent Airlink Communication Limited. Both sub-facilities are cross-collateralized and subject to cross-default provisions. The facility will carry a floating profit rate of 3M KIBOR + 125bps, a ten-year tenor inclusive of a one-year grace period, and principal repayable in up to thirty-six (36) equal quarterly instalments with profit payable quarterly in arrears. Proceeds finance Airlink and Select’s manufacturing facility at Sundar Green Special Economic Zone (SGSEZ), Lahore. The assigned rating draws comfort from the credit enhancement envisaged through an InfraZamin Pakistan Limited (IZP) guarantee, covering 75% of outstanding principal, and a layered security structure, alongside the borrower’s standalone credit profile. However, the approval remains under process and is currently in its final stages. As per the envisaged structure, primary recourse upon non-payment would first be directed to the Debt Payment Account (DPA) and Debt Service Reserve Account (DSRA), with guarantee invocation triggered only upon DPA exhaustion at an instalment due date. Security is multi-tiered: a first pari passu equitable mortgage at SGSEZ; first pari passu hypothecation over fixed assets (initially a ranking charge, upgraded to first pari passu within 120 days); first pari passu hypothecation over current assets; a cross-corporate guarantee from Airlink and personal guarantee of the primary sponsor; and an irrevocable sponsor support undertaking covering all Project Account shortfalls. Payment certainty is enforced through a three-tier waterfall: the Collection Account must hold 1.0x the outstanding facility in annual revenues; the DSRA is pre-funded before first disbursement at 1x upcoming quarterly principal and maintained throughout; and the DPA is funded in three equal monthly tranches, funded by each due date. Surplus collections are released to Select only in the absence of any Event of Default. Select is Pakistan’s licensed Xiaomi smartphone manufacturer with an annual assembly capacity of ~2.7 million units. During 3MCY26 (Jan–Mar’26), local mobile phone production declined ~2.6% YoY to 7.36 million units, comprising ~3.94 million 2G phones and ~3.42 million smartphones, while imports increased to 1.22 million units. The divergence between declining local output and rising imports reflects growing consumer preference for premium, technologically advanced handsets, while also highlighting competitive and demand-side pressures on domestic assemblers. During 9MFY26, the Company’s topline declined ~37.1% to ~PKR 23,052mln (FY25: ~PKR 48,893mln). The decline reflects both the phase-out of high-volume, low-margin 4G devices as Select shifts its product mix and softer industry-wide smartphone demand. Despite lower sales, profitability improved, with gross, operating, and net margins reaching ~16.2%, ~13.4%, and ~5.8%, respectively. On the operational front, the Company has successfully launched and commenced assembly of Hisense air conditioners and LED TVs at its new facility in Sundar.
Sustained compliance with pre-agreed financial matrix, reflecting adherence to a well-defined and disciplined financial framework, remains important. Furthermore, the successful execution of the post-commissioning deleveraging trajectory, timely commercialization, and operational stabilization of the SGSEZ facility, along with prudent liquidity and robust working capital management, shall remain imperative.

About the Entity
Select Technologies Limited was incorporated in Pakistan on October 13th, 2021, as a private limited entity. The Company’s ~99.9% financial stake rests with AIRLINK (parent company). On January 06th, 2026, the Company converted from a private limited company to a public limited company.