Business

Saturday January 5, 2013

RAM reaffirms Lekas sukuk ratings

By WONG WEI-SHEN
weishen.wong@thestar.com.my


PETALING JAYA: RAM Ratings Services Bhd has reaffirmed its ratings of Lebuhraya Kajang-Seremban Sdn Bhd's (Lekas) RM785mil senior sukuk and RM633mil junior sukuk at BB1 and B1 respectively.

However, the rating agency said the outlook on the ratings remained negative given the mismatch in Lekas' cashflow generation and its financing obligations.

The 44-km highway commenced full tolling operations on Sept 21, 2010 and has the concession rights until May 2039.

“The ratings of the senior and junior sukuk continue to reflect low safety for payment on the respective financial obligations,” it said.

The company does not have sufficient cash reserves to fully meet the first principal repayment on the senior sukuk of RM40mil, which is due in June 2014. “The rating difference between the senior and junior sukuk is premised on the latter's subordination in terms of cashflow priority and security,” RAM Ratings said.

The rating agency said the rating outlook mmight face further rating pressure if the management current refinancing plan failed to materialise in the next few months.

“Notably, the company has made significant progress in the refinancing of the senior sukuk since the last rating review,” it said.

The company's plan involves a refinancing and full redemption of the senior sukuk via an RM400mil syndicated term loan (STL) and RM263mil of redeemable convertible unsecured loan stocks.

The term sheet for the STL has been finalised and the entire exercise is targeted to be complete by the end of February.

“RAM Ratings will continue to closely monitor developments in this regard. Meanwhile, refinancing plans for the junior sukuk remain inconclusive at this juncture,” it said.

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