Monday, Mar 03, 2003
MARC has downgraded the long term rating of SPRINT’s RM510 million Al-Bai Bithaman Ajil Islamic debt securities from AID (Single A, Islamic Debt) to A–ID (Single A Minus, Islamic Debt) and the RM365 million Bank Guaranteed Serial Fixed Rate Bonds from A (Single A) to A– (Single A Minus). The company’s Revolving Underwritten Facility has, nevertheless, been affirmed at MARC-2. The revision of SPRINT’s long term ratings was based on the weak traffic volumes at the Kerinchi and Damansara Links of the SPRINT highway, which was below the initial traffic projections. The ratings continue to be supported by the project sponsors’ financing commitment of up to RM460 million to the project; their experience and track record in managing similar infrastructure projects; and the reasonably covered construction risk under the fixed price contract.
SPRINT was awarded a 33-year concession to undertake the Western Kuala Lumpur Traffic Dispersal Scheme on a Build, Operate and Transfer basis under an agreement signed in October 1997 between the government and SPRINT. Under the 2001 Fourth Supplemental Agreement, both parties agreed to reductions in the scheduled toll rates and in consideration of the toll reduction, SPRINT received RM70 million in cash compensation from the government and an extension of the concession period for both the Damansara and Kerinchi Links from the original 33 years to 36 years (The concession period for the Penchala link remained unchanged at 33 years).
Construction of the highway was divided into three distinct packages: A (Kerinchi Link), B (Damansara Link) and C (Penchala Link). Construction of Packages A and B was completed six months ahead of schedule in June 2001, at a total cost of RM764.1 million including additional works amounting to RM36.4 million. Tolling operations for both Packages A and B commenced in September 2001. Following the commencement of tolling operations, both the Kerinchi and Damansara Links recorded lower average daily tollable volumes, despite the toll reductions, compared to the initial traffic forecasts. Construction work for Package C, which was initially deferred, commenced in August, 2001 and is expected to be completed by August, 2004. Package C (linking Kg. Sg. Penchala to Mont Kiara) was awarded to the Gamuda-Mujur Minat joint venture; the same turnkey contractor for the previous packages. MARC views the risk of delayed completion as low for this remaining package. The most difficult part of this link from an engineering standpoint is the construction of a 700 metre-long tunnel that has been subcontracted to an Italian construction company, Cooperativa Muratori e Cementisti. Additionally, cost overrun risk is mitigated to a significant extent by the fixed price nature of the turnkey contract.
SPRINT was awarded a 33-year concession to undertake the Western Kuala Lumpur Traffic Dispersal Scheme on a Build, Operate and Transfer basis under an agreement signed in October 1997 between the government and SPRINT. Under the 2001 Fourth Supplemental Agreement, both parties agreed to reductions in the scheduled toll rates and in consideration of the toll reduction, SPRINT received RM70 million in cash compensation from the government and an extension of the concession period for both the Damansara and Kerinchi Links from the original 33 years to 36 years (The concession period for the Penchala link remained unchanged at 33 years).
Construction of the highway was divided into three distinct packages: A (Kerinchi Link), B (Damansara Link) and C (Penchala Link). Construction of Packages A and B was completed six months ahead of schedule in June 2001, at a total cost of RM764.1 million including additional works amounting to RM36.4 million. Tolling operations for both Packages A and B commenced in September 2001. Following the commencement of tolling operations, both the Kerinchi and Damansara Links recorded lower average daily tollable volumes, despite the toll reductions, compared to the initial traffic forecasts. Construction work for Package C, which was initially deferred, commenced in August, 2001 and is expected to be completed by August, 2004. Package C (linking Kg. Sg. Penchala to Mont Kiara) was awarded to the Gamuda-Mujur Minat joint venture; the same turnkey contractor for the previous packages. MARC views the risk of delayed completion as low for this remaining package. The most difficult part of this link from an engineering standpoint is the construction of a 700 metre-long tunnel that has been subcontracted to an Italian construction company, Cooperativa Muratori e Cementisti. Additionally, cost overrun risk is mitigated to a significant extent by the fixed price nature of the turnkey contract.