Wednesday, Apr 24, 2002
Road Asset Vehicle Sdn Bhd’s (RAV) rating of MARC-2 reflects the bankruptcy remote status of this special purpose vehicle (SPV); credit support in the form of the assignment of a corporate guarantee issued by Kumpulan Guthrie Bhd in respect of the amount payable by Guthrie Corridor Expressway Sdn Bhd (GCE) under the progress certificates including interest and financing costs; liquidity support provided by the underwriting facility and a reserve to cover any funding shortfall; the credit strength and good track record of the originator, WCT Engineering Bhd (WCT); and avoidance of commingling risk through the direct payment arrangement to the SPV of amounts due under the progress certificates.
The SPV is a bankruptcy remote, special purpose vehicle set up to acquire interest in receivables, that is, progress certificates of the originator, funded through the issuance of commercial papers. The originator, WCT, [corporate debt rating : A–(s)] is a contractor involved in highway, infrastructure works and building projects. WCT has been awarded the contract for the construction and completion of Guthrie Corridor Expressway over a period of 24 months and at a fixed contract sum of RM386 million. GCE, a wholly owned subsidiary of Kumpulan Guthrie Bhd, is the concessionaire of the Guthrie Corridor Expressway, a dual three-lane expressway of approximately 25 km in distance linking Shah Alam and Kuang.
The commercial papers will be issued against up to 95% of the value of the progress certificates sold to the SPV. The certificates relate to works completed as endorsed by an Independent Consulting Engineer. Note holders and the SPV are, therefore, not exposed to the risk of non-performance or non-completion by WCT of its obligations under the construction contract. In the event of a premature termination of the contract due to default by WCT, GCE will settle all amounts due under the progress certificates then issued including outstanding financing costs and the proceeds thereof will be utilized to fully settle the CPs outstanding. Cost overrun risk is mitigated by the fixed lump sum nature of the Construction Contract. Any cost overrun will be borne entirely by the originator.
The CPs shall be fully underwritten, with a final maturity set one year after the stipulated completion date of the entire construction contract, to accommodate for any delays in construction works. The CPs may be retired earlier than 30 September 2004 but not earlier than 30 Sep 2003. Liquidity risk is also mitigated through the maintenance of a reserve sum equivalent to RM5.0 million that will be built up during the initial 12-month period of the facility. The reserve can be utilized to meet any scheduled payments under the facility in the event of a shortfall in funds.
Under the terms of the Construction contract, GCE will bear the interest cost on 95% of the amount due under each progress certificate. The interest costs together with project payments will be remitted directly by GCE to the SPV’s project account; avoiding the commingling of the monies with the other assets of the originator. While the project payments will be solely utilized for the repayment of the CPs, interest payments by GCE have been earmarked for financing charges under the CPs.
The SPV is a bankruptcy remote, special purpose vehicle set up to acquire interest in receivables, that is, progress certificates of the originator, funded through the issuance of commercial papers. The originator, WCT, [corporate debt rating : A–(s)] is a contractor involved in highway, infrastructure works and building projects. WCT has been awarded the contract for the construction and completion of Guthrie Corridor Expressway over a period of 24 months and at a fixed contract sum of RM386 million. GCE, a wholly owned subsidiary of Kumpulan Guthrie Bhd, is the concessionaire of the Guthrie Corridor Expressway, a dual three-lane expressway of approximately 25 km in distance linking Shah Alam and Kuang.
The commercial papers will be issued against up to 95% of the value of the progress certificates sold to the SPV. The certificates relate to works completed as endorsed by an Independent Consulting Engineer. Note holders and the SPV are, therefore, not exposed to the risk of non-performance or non-completion by WCT of its obligations under the construction contract. In the event of a premature termination of the contract due to default by WCT, GCE will settle all amounts due under the progress certificates then issued including outstanding financing costs and the proceeds thereof will be utilized to fully settle the CPs outstanding. Cost overrun risk is mitigated by the fixed lump sum nature of the Construction Contract. Any cost overrun will be borne entirely by the originator.
The CPs shall be fully underwritten, with a final maturity set one year after the stipulated completion date of the entire construction contract, to accommodate for any delays in construction works. The CPs may be retired earlier than 30 September 2004 but not earlier than 30 Sep 2003. Liquidity risk is also mitigated through the maintenance of a reserve sum equivalent to RM5.0 million that will be built up during the initial 12-month period of the facility. The reserve can be utilized to meet any scheduled payments under the facility in the event of a shortfall in funds.
Under the terms of the Construction contract, GCE will bear the interest cost on 95% of the amount due under each progress certificate. The interest costs together with project payments will be remitted directly by GCE to the SPV’s project account; avoiding the commingling of the monies with the other assets of the originator. While the project payments will be solely utilized for the repayment of the CPs, interest payments by GCE have been earmarked for financing charges under the CPs.