PACRA maintains the rating of TPL Corp Limited | PP Sukuk | Jun-22 | RW

The ratings encapsulate the strength of the security structure of Privately Placed Islamic Certificates (Sukuk). Sukuk has a multi-layered protection mechanism that provides intrinsic mitigation against unforeseen risks. Sukuk is secured by way of shares of TPL Properties, shares of TPL Trakker and TPL REIT units with 30% margin to be maintained at all times. However, during 3QFY24 the margin have remained volatile which the Company is managing by adding additional securities. The DPA is being held under exclusive lien for the benefit of the Participating Institution(s). DPA is being funded by a) the dividends from group companies, b) proceeds from the sale of Sponsor shares in TPL Trakker, and c) Right share issuance of the Company. The cash entrapment threshold for the proceeds from the sale of shares of TPL Trakker is two upcoming installments. Similarly, the cash entrapment threshold for the proceeds from Right Share issuance is three upcoming installments. As a last resort, the issuing agent has the right to liquidate the securities, in case, before the payment date, DPA is not funded, the issuing agent would initiate the process for the realization of the underlying security on an immediate basis. The maximum length of the cure period can be 15 days. The cure period availed would attract markup at the rate of 3MK + 250bps instead of the instrument existing markup at the rate of 3MK +225bps. In addition to the above-stated security, the TPL Corp Sukuk and TFC are also secured by way of an insurance guarantee amounting to PKR 75mln each in favor of TFC and Sukuk holders. This guarantee would cover the quarterly interest payment of the PP Sukuk and PPTFC. Though the company has made its 8th coupon payment to its investors, but unable to meet its margin requirements.
The rating would remain contingent on compliance with the security structure and timely fulfillment of the margin requirements. The Company is in the process of meeting the shortfall.

About the Entity
TPL Corp previously known as TPL Trakker, is a public listed company and is engaged in making investments in Group and other companies. Mr. Ali Jameel heads the Company as the CEO and is aided by a team of experienced professionals.

About the Instrument
TPL Corp have issued a Sukuk of ~PKR 2.19bln to contribute towards reprofiling of existing debt and acquisition of additional shares of group companies. Sukuk carries markup of 3M KIBOR plus 2.25% per annum. Profit is being paid quarterly in arrears calculated on a 365 day year basis on the outstanding principal amount. Principal redemption shall commence from the 3rd year of the issue date in 6 equal installments.