Press Releases MARC AFFIRMS AAA(fg) RATING ON TRIPLC VENTURES’ RM240.0 MILLION SENIOR MTN PROGRAMME

Wednesday, Jan 30, 2019

MARC has affirmed its AAA(fg) rating on TRIplc Ventures Sdn Bhd’s (TVSB) RM240.0 million Senior Medium-Term Notes (Senior MTN) Programme with a stable outlook. As at January 30, 2019, the total outstanding notes under the rated programme stood at RM180.0 million. The rating reflects the credit strength of an unconditional and irrevocable guarantee provided by Danajamin Nasional Berhad (Danajamin) on the Senior MTN obligations. Danajamin has an insurer financial strength rating of AAA/stable from MARC.

TVSB is a wholly-owned subsidiary of TRIplc Berhad which in turn is wholly owned by Puncak Niaga Holdings Berhad. TVSB is the concessionaire of Universiti Teknologi MARA’s (UiTM) Zone 1 Phase 2 project in Puncak Alam, Selangor, which is currently in the fifth year of its maintenance phase following the project’s completion in April 2014. Under the concession agreement, TVSB receives availability charges (AC) and maintenance charges (MC) payments from the project lessee, UiTM, throughout the 20-year maintenance phase. The AC payments are fixed at RM42.5 million p.a., while the MC payments are subject to review every five years and are conditional upon TVSB meeting specified key performance indicators.

TVSB’s standalone rating is contingent on the company’s ability to meet the performance requirement, which is largely moderated by the straightforward nature of the maintenance works. The standalone rating also hinges on timely payment receipts from UiTM. Principally funded by the Ministry of Higher Education, the university is to make the necessary payments within 30 days of the submission of relevant invoices, largely reducing counterparty risk in the transaction.

For financial year ended May 31, 2018 (FY2018), TVSB posted a revenue of RM42.2 million (FY2017: RM43.0 million). Its pre-tax profit, however, stood higher at RM12.9 million mainly due to lower financing costs as the company continues to pay down its senior debt. Operating cash flow stood higher at RM47.4 million after taking into account the AC payment for April 2017. TVSB registered free cash flow of RM37.1 million following a dividend payment of RM10.0 million (FY2017: RM10.0 million).

TVSB’s debt service cover ratios (DSCR) are projected to remain above 1.61x and 1.52x for the pre-restricted and post-restricted distribution. Stressed scenarios indicate TVSB would be able to withstand up to a 1% reduction in the MCs before breaching its post-restricted distribution covenant of 1.50x. Similarly, any delays of more than one month in AC or MC receipts will see a breach in the post-restricted distribution covenant as early as 2019. Liquidity risk is mitigated by the requirement to maintain the debt service reserve account balance of at least one year’s premium and six months’ interest charges while the next six-month principal payment shall be built up progressively commencing seven months prior to the principal redemption date. In addition, the Junior Notes interest payments can be deferred to the next scheduled payment date if the post-restricted distribution DSCR covenant is not met.

Downside risks in the project’s credit profile are mitigated by the presence of the unconditional and irrevocable guarantee provided by Danajamin. Any revision in TVSB’s rating and/or outlook would hinge on a revision in Danajamin’s credit strength.


Contacts:
Ati Affira Kholid, +603-2717 2941/ affira@marc.com.my;
David Lee, +603-2717 2955/ david@marc.com.my.