Published: Thursday October 4, 2012 MYT 6:45:00 PM

Weststar Capital proposes RM900m Sukuk

KUALA LUMPUR: Offshore aviation services provider Weststar Aviation Services Sdn Bhd has proposed to raise RM900mil under a Sukuk Mudharabah programme.

Malaysian Rating Corporation Bhd (MARC) said on Thursday the proceeds from the notes would be used mainly to refinance up to RM870mil of existing debt at Weststar.

MARC assigned a preliminary rating of AA-IS with a stable outlook to the notes which would be issued by Weststar's special purpose entity Weststar Capital Sdn Bhd.

"The notes are secured by a deed of assignment of Weststar's rights to revenue and income to be received under five 10-year service contracts with five oil majors, a charge over the 11 medium-sized AW-139 AgustaWestland helicopters, of which 10 are being used to fulfil the contracts, and an assignment of all insurance and takaful policies taken out on the assets of the issuer and Weststar," it said.

MARC said the notes are also collateralised by designated accounts to be opened and maintained in respect of the programme.

The rating agency said revenue collections from the five service contracts will be captured by project accounts from which 40% of collections is directed towards payment to Weststar Capital for its debt service; the balance is allocated to Weststar to meet operating expenses and capital expenditures in respect of the contracts, shareholder distributions.

MARC stated if the actual cash flows generated by the five contracts deviate significantly from the base case cash flow projections, additional amounts beyond the pledged 40% of collections will be applied to maintain Weststar Capital's finance service reserves at 1.25 times of debt service in the most recent financial year.

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