Agha Steel Industries Limited intends to raise Rs. 2 billion, including Rs. 500 million greenshoe option.
The proceeds from the Sukuk will be used to repay conventional short-term financing loans up to Rs. 1.5 billion and to fund the company’s ongoing capital expenditure.
Profit will be paid quarterly at a rate equal to three months KIBOR plus 125 basis points, with the initial payment due three months from the first drawdown date. The principal bullet will be repaid 15 months after the issue date.
The credit rating agency VIS has assigned the proposed Sukuk a preliminary rating of A (Single-A).
According to the rating agency, the instrument will have a maturity of fifteen months from the initial drawdown date, with a one-year call option.
According to VIS, the assigned rating factor in the security structure of the instrument includes the first joint pari passu hypothecation charge over all of the Company’s present and future current assets with a 25% margin, personal guarantees of the organization’s sponsor directors, and a ranking charge over the Company’s present and future fixed assets with a 25% margin.
Additionally, the Sukuk rating is contingent on predicted improvements in the liquidity profile and leverage indicators, for which the prompt completion of the expansion project is deemed critical.