Friday, Jan 06, 2006
MARC has reaffirmed the rating of Special Port Vehicle Bhd’s (SPV) RM1,310.0 million nominal amount asset-backed serial bonds facility. The rating affirmation is premised on the superior credit rating of the Government of Malaysia (GOM) backing Port Klang Authority (PKA), the obligor under the transaction; minimal exposure to construction risk with completion of infrastructure works as at end December 2004; the national importance of the project evidenced by the letter of support issued by the GOM in favour of the Trustee, Pacific Trustees Berhad; and a protective issue structure which substantially mitigates liquidity risk during the tenure of the facility.
SPV is a special purpose, bankruptcy remote company, incorporated for the purpose of acquiring the future receivables (including interest) amounting to RM1,699.63 million forming the balance consideration price under a Sale and Purchase Agreement (S&P) dated November 2002 between Kuala Dimensi Sdn Bhd (KDSB), the originator and PKA, the obligor. Under the S&P, KDSB is required to undertake land reclamation and infrastructure works including drainage, main access road, bridge and laying of water pipes.
Construction risk is deemed moderate given the technical nature of such works and the considerable reclamation and dredging experience of Wijaya Baru Sdn. Bhd., a Class A PKK contractor. Reclamation works were completed by end December 2003 whilst the remaining basic infrastructure works were completed by end December 2004 i.e. within the stipulated 24 months period under the S&P. Works required on the monsoon drains and water supply have been revised due to the decision by PKA to develop Port Klang Free Zone/ Transshipment Megahub (PKFZ) in one single phase instead of two phases whereby the specifications for monsoon drainage and water supply system were changed to accommodate for higher water supply capacity. These works are currently part of the development works of PKFZ. The development works of PKFZ are undertaken by KDSB as the appointed turnkey contractor and Wijaya Baru Sdn. Bhd. as the main contractor with construction cost funded by the proceeds from issuance of RM1,095.0 million fixed rate serial bonds and RM360.0 million CP/MTN facility by Transshipment Megahub Berhad.
The Ministry of Transport (MOT) has, vide its letter dated 28th May 2003, confirmed the government’s approved purchase of the land by PKA and development of PKFZ on the said land and PKA’s obligation to pay the remaining sum over a 15-year period (including a 4-year moratorium period from issuance) as stipulated in the S&P. Credit risk is considered superior reflecting the government’s backing of PKA to undertake the strategically important project.
Liquidity risk is mitigated through the prefunding of coupons in the coupon service payment account to cover for coupons due and payable during the moratorium period prior to first payment from PKA in June 2007. Liquidity risk arising from unforeseen delays in payments from PKA is also mitigated through maintenance of a six months bond servicing reserve in a Finance Service Reserve Account amounting to RM35.19 million; timing buffer between the projected date of receipts of funds from PKA (every June commencing June 2007 up to June 2017) and the scheduled repayment date of the bonds (every July commencing July 2007 up to July 2017); and the excess spread between the interest earned on the deferred payment by PKA and interest payable on the bonds.
SPV is a special purpose, bankruptcy remote company, incorporated for the purpose of acquiring the future receivables (including interest) amounting to RM1,699.63 million forming the balance consideration price under a Sale and Purchase Agreement (S&P) dated November 2002 between Kuala Dimensi Sdn Bhd (KDSB), the originator and PKA, the obligor. Under the S&P, KDSB is required to undertake land reclamation and infrastructure works including drainage, main access road, bridge and laying of water pipes.
Construction risk is deemed moderate given the technical nature of such works and the considerable reclamation and dredging experience of Wijaya Baru Sdn. Bhd., a Class A PKK contractor. Reclamation works were completed by end December 2003 whilst the remaining basic infrastructure works were completed by end December 2004 i.e. within the stipulated 24 months period under the S&P. Works required on the monsoon drains and water supply have been revised due to the decision by PKA to develop Port Klang Free Zone/ Transshipment Megahub (PKFZ) in one single phase instead of two phases whereby the specifications for monsoon drainage and water supply system were changed to accommodate for higher water supply capacity. These works are currently part of the development works of PKFZ. The development works of PKFZ are undertaken by KDSB as the appointed turnkey contractor and Wijaya Baru Sdn. Bhd. as the main contractor with construction cost funded by the proceeds from issuance of RM1,095.0 million fixed rate serial bonds and RM360.0 million CP/MTN facility by Transshipment Megahub Berhad.
The Ministry of Transport (MOT) has, vide its letter dated 28th May 2003, confirmed the government’s approved purchase of the land by PKA and development of PKFZ on the said land and PKA’s obligation to pay the remaining sum over a 15-year period (including a 4-year moratorium period from issuance) as stipulated in the S&P. Credit risk is considered superior reflecting the government’s backing of PKA to undertake the strategically important project.
Liquidity risk is mitigated through the prefunding of coupons in the coupon service payment account to cover for coupons due and payable during the moratorium period prior to first payment from PKA in June 2007. Liquidity risk arising from unforeseen delays in payments from PKA is also mitigated through maintenance of a six months bond servicing reserve in a Finance Service Reserve Account amounting to RM35.19 million; timing buffer between the projected date of receipts of funds from PKA (every June commencing June 2007 up to June 2017) and the scheduled repayment date of the bonds (every July commencing July 2007 up to July 2017); and the excess spread between the interest earned on the deferred payment by PKA and interest payable on the bonds.