Thursday, Jul 14, 2005
MARC has assigned rating of A+ID and MARC-2ID/A+ID to KLT’s proposed issuance of RM380 million BBA MTN and up to RM80 million MCP/MTN (“collectively known as Finance Facilities”) respectively. Proceeds from the Finance Facilities will be utilised to repay an existing bridging loan; to part finance the construction costs of Section II of the Kuala Lumpur – Putrajaya Highway (“the Highway”); to part finance the development costs of the Highway; to satisfy the requirement to pre-fund the Finance Service Account during the construction period; payment of the up-front fees and expenses and for working capital requirements.
The assigned ratings reflect, amongst others, the high level of participation from the Government of Malaysia in the form of a Government grant totalling RM976.7 million and its full responsibility in land acquisition reflects the national importance of this project to the development of Putrajaya as a world class administrative centre. Shareholders’ commitment is not limited to only funding, but also the undertaking by Maju Holdings Sdn Bhd (“Maju Holdings”), the largest shareholder, to cover any shortfall in the Finance Service Account if the completion of the Highway is delayed by one year due to the fault of KLT. The strict financial covenants of the Finance Facilities provide the bond holders with adequate protection against cashflow leakages. However, moderating the above is the uncertainty surrounding the actual traffic vis-à-vis the projected traffic demand given the presence of alternative routes and the sensitivity of toll users to the toll rates once the Highway is operational.
KLT signed a Concession Agreement with the Government of Malaysia on 22 October 1997. The concession is for a period of 33 years commencing from the date of a Second Supplemental Concession Agreement signed on 28 October 2003. As the concessionaire, KLT shall manage the operations of the Highway and collect toll receipts. The company is 90.2% owned by Bright Focus Sdn Bhd, which in turn is wholly owned by Maju Holdings. The scope of works to be undertaken by KLT includes the construction of a 26-km highway stretching from Kuala Lumpur to Putrajaya.
Construction of the Highway will be divided into three segments. Section I starts from Jalan Tun Razak at Kampung Pandan Roundabout to Technology Park Malaysia. Section II spans from Technology Park Malaysia at Bukit Jalil to Putrajaya. The third and last segment is the Putrajaya Link Interchange. Section I and the Putrajaya Link Interchange are Government funded stretches while the construction cost of Section II of the Highway will be borne by KLT. The total construction and development costs of the Highway is RM1,380 million. The turnkey contractor for this project is Maju Holdings. Any risk of cost overrun is mitigated to a certain degree by the fixed-price fixed period turnkey contract and delay risk has been passed to Maju Holdings through back-to-back liquidated ascertained damages arrangement in the turnkey contract.
Based on the projected cash flow, KLT’s cash flow is deemed to be robust given that the base case finance service coverage ratio shows a minimum and average of 3.84x and 13.54x respectively during the tenure of the Finance Facilities.
The assigned ratings reflect, amongst others, the high level of participation from the Government of Malaysia in the form of a Government grant totalling RM976.7 million and its full responsibility in land acquisition reflects the national importance of this project to the development of Putrajaya as a world class administrative centre. Shareholders’ commitment is not limited to only funding, but also the undertaking by Maju Holdings Sdn Bhd (“Maju Holdings”), the largest shareholder, to cover any shortfall in the Finance Service Account if the completion of the Highway is delayed by one year due to the fault of KLT. The strict financial covenants of the Finance Facilities provide the bond holders with adequate protection against cashflow leakages. However, moderating the above is the uncertainty surrounding the actual traffic vis-à-vis the projected traffic demand given the presence of alternative routes and the sensitivity of toll users to the toll rates once the Highway is operational.
KLT signed a Concession Agreement with the Government of Malaysia on 22 October 1997. The concession is for a period of 33 years commencing from the date of a Second Supplemental Concession Agreement signed on 28 October 2003. As the concessionaire, KLT shall manage the operations of the Highway and collect toll receipts. The company is 90.2% owned by Bright Focus Sdn Bhd, which in turn is wholly owned by Maju Holdings. The scope of works to be undertaken by KLT includes the construction of a 26-km highway stretching from Kuala Lumpur to Putrajaya.
Construction of the Highway will be divided into three segments. Section I starts from Jalan Tun Razak at Kampung Pandan Roundabout to Technology Park Malaysia. Section II spans from Technology Park Malaysia at Bukit Jalil to Putrajaya. The third and last segment is the Putrajaya Link Interchange. Section I and the Putrajaya Link Interchange are Government funded stretches while the construction cost of Section II of the Highway will be borne by KLT. The total construction and development costs of the Highway is RM1,380 million. The turnkey contractor for this project is Maju Holdings. Any risk of cost overrun is mitigated to a certain degree by the fixed-price fixed period turnkey contract and delay risk has been passed to Maju Holdings through back-to-back liquidated ascertained damages arrangement in the turnkey contract.
Based on the projected cash flow, KLT’s cash flow is deemed to be robust given that the base case finance service coverage ratio shows a minimum and average of 3.84x and 13.54x respectively during the tenure of the Finance Facilities.