KARACHI (December 27 2002) : United Bank is structuring and advising Rs 990 million listed Term Finance Certificates (TFCs) issue, which is expected to be Pakistan's first listed and rated Asset Backed Securitisation (ABS) transaction.
The TFCs are backed by present and future receivables of Paktel Limited, through a True Sale Securitisation structure.
A Special Purpose Vehicle, (SPV) Limited has been constituted under the Companies (ABS) Rules, 1999 to facilitate the transaction.
The signing ceremony of the sale and purchase agreement between Patel, SPV and United Bank (as the Collection Agent) was held in Lahore last week.
Under the proposed Securitisation transaction, Paktel will sell a portion of its present and future receivables and other revenues to SPV Limited.
The SPV will finance the Sale Price for the purchased Receivables by issuing redeemable capital in the form of listed TFCs.
The TFC holders will be secured by the SPV through a hypothecation of Purchased Receivables sold to the SPV.
The State Bank has issued regulations enabling banks and DFIs to invest in the debt issued by the SPV.
The TFC issue comprises of two types of TFCs – TFC (A) and TFC (B), subordinated to TFC (A) – amounting to Rs 840 million and Rs 150 million respectively.
The total TFC issue comprises of a Pre-IPO of Rs 790 million and public offering of Rs 200 million.
The Pre-IPO received strong response from the capital markets and has been oversubscribed. The IPO is expected by the end of January 2003.
The instrument has tenure of three years with a floating profit rate with a floor and a cap rate.
The proposed TFC has been assigned an Instrument Rating of 'A' (single A) by Pakistan Credit Rating Agency (PACRA) which donates low expectation of investment risk and a strong capacity for timely redemption of principal and payment of expected profit.
Paktel is reputed as a leader in terms of coverage, network, quality and value-added services.
It is presently offering cellular services in 38 cities of Pakistan and outdoor coverage in additional 60 cities of the country.
Recently Paktel has been grated a modification to its licence which will also allow it to operate on EGSM technology.
Paktel licence will enable it to capitalise further on the substantial growth in the cellular market in Pakistan.