PACRA Assigns the Preliminary Ratings to Select Technologies (Pvt.) Limited | PPSTS-III | PKR 2.0bln | TBI

Select Technologies (Private) Limited (hereafter referred to as ‘SELECT’ or ‘the Company’) is a wholly owned subsidiary of Air Link Communication Limited (AIRLINK). The Company specializes in manufacturing, assembling, and selling smartphones and related accessories in Pakistan under renowned mobile phone brands. SELECT has established itself as a key player in Pakistan’s technology sector, backed by a sustainable business model and strong support from its parent company. During FY25, the SELECT’s sales recorded a ~33.4% YoY decline, mainly due to a temporary dip in demand caused by higher taxes. However, the parent company’s consolidated performance in 1QFY26 reflected signs of recovery. The Company’s financial risk profile is characterized by an adequate working capital cycle, coverage ratios, and cash flows. The Company is in the phase of establishing a new state-of-the-art production facility, designed to manufacture export-oriented products for international brands. To complement this expansion and further support liquidity, the Company plans to issue a Rated, Secured, Privately Placed, Short-Term Sukuk, valued at PKR 2,000 million. The Sukuk issuance serves as a short-term bridge financing arrangement to meet the Company’s immediate CAPEX requirements ahead of the finalization of the syndicated long-term facility of PKR 5,300 million, expected to be activated within a short span of time. The instrument also carries a call option, allowing early redemption upon the availability of long-term funding. In addition, the Issuer has undertaken to cap working capital facilities from identified financial institutions at a pre-agreed level, ensuring that the equivalent amount of PKR 2,100 million remains unutilized throughout the Sukuk’s tenor, which will serve as a back-up source for instrument repayment if required.
The underlying instrument is secured by a ranking charge over the Company’s current assets. To ensure repayment discipline, the Issuer shall maintain a Debt Payment Account (“DPA”) under the Investment Agent’s lien to ensure repayment discipline. The Issue will be redeemed in three (3) equal installments of one-third (1/3) each of the Issue Amount, starting at the end of the 4th month from the Issue Date, with each installment deposited into the DPA at least three days before its respective redemption date.
The rating depends on the Company’s ability to sustain its relative position amidst a changing industry environment and its sustainable business partnership with a global brand. Continued adherence to agreed financial covenants, particularly maintaining full coverage of free cash flows from operations (FCFO) to gross sukuk obligations and preserving the desired level of leverage, will remain critical.

About the Entity
Select Technologies (Pvt.) 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).

About the Instrument
Select Technologies (Pvt.) Ltd. is set to issue its third Rated, Secured, Privately Placed, Short-term Sukuk-III of PKR 2.0bln. The Sukuk carries a markup at 6MK+1.35% with a tenor of six months. The repayment of principal and markup will be done in a bullet upon maturity. The underlying instrument will be secured by a ranking charge over the Current Assets of the company. Additionally a Corporate Guarantee (“CG”) is also provided by Airlink (Parent) to be equivalent to the outstanding issue size plus any accrued markup in favor of the Investment Agent for the benefit of instrument holders during the tenor of the Issue. Furthermore, the issue incorporates a built-in call option, enabling the Company, after 60 days from the date of first disbursement, to exercise the option either in full or in part by providing fifteen (15) days’ prior written notice to the Lenders/Financiers. The redemption under the Call Option is intended to be funded through the proceeds of the syndicated financing facility.