PACRA Assigns Rating to Multinet Pakistan (Pvt.) Limited | Digital Infrastructure Facility | PKR 2100 mln

The Loan facility involves three parties: Multinet Pakistan (Private) Limited as the Borrower, Habib Bank Limited as the Bank, security agent, and inter-creditor agent, and InfraZamin Pakistan Limited as the Guarantor. The contract establishes a tri-party relationship among these entities. Multinet has availed financing to the extent of PKR 2,100mln (as per management representation initially the contract was designed to be 2,100mln but was later restricted to 1,038mln due surge in policy rate), from the Habib Bank Limited and the Guarantor has guaranteed 75% of the outstanding portion of the finance facility. The proceeds of the facility are being utilized for the addition of 100 data center racks (PKR 357mln), long haul capacity expansion from 12.5 Gbps to 200 Gbps, an expansion of fiber footprint (PKR 431mln), tower fiberization (PKR 100mln) and funding of DSRA (PKR 150mln). The Facility is secured by the way of i) Pari Passu hypothecation charge over the present and future movable fixed assets of the Company with a minimum 25% margin ii) specific contracts and receivables of the Borrower are assigned and routed through a designated Escrow Account at Habib Bank Limited, with a Lien over and set-off rights on the Escrow Account iii) 100% of the Borrower's shares are pledged iv) Personal Guarantee of the Sponsor and Sponsor Support Agreement v) Debt Payment Account opened for monthly routing of next installment amount for the specific receivables and vi) Debt Service Reserve Account opened for 1.5x of peak quarterly installment. On the financial profile side, during CY23 the Company has generated a topline of ~PKR 4,564mln (CY22: ~PKR 4,866mln) and a bottom line of ~PKR 111mln (CY22: ~PKR 307mln).
The given rating is based on the financial risk profile of the borrower as well as the reputation of the Guarantor. InfraZamin Pakistan Limited leverages the prior experience of InfraCo Asia and GuarantCo in supporting infrastructure projects in Pakistan, as well as Karandaaz’s local market knowledge and track record of investments focused on supporting financial inclusion. IZP has been assigned the long-term rating of “(AAA)” by PACRA.

About the Entity
Multinet Pakistan (Pvt.) Limited was incorporated in 1996, as a private limited company. Primary business activity of the Company is to provide telecommunications infrastructure and services. Mr. Adnan Asdar Ali is a major shareholder, having a 99.9% stake. Whereas, Mr. Adnan Hayat Zaidi heads the Company as the CEO. The product slate of the Company comprises provision of broadband & data connectivity related services to corporates, long-haul and metro optical fiber infrastructure requirements for telecom operators, international voice termination, fixed line telephony, and partnering with global carriers to provide broadband and data connectivity solutions to their customers operating in Pakistan.

About the Instrument
Multinet Pakistan (Pvt.) Limited has issued a privately placed secured instrument of PKR 2,100mln. The profit is being paid quarterly in arrears at the rate of 3M Kibor+0.75% p.a calculated on a 365 days basis on the outstanding principal amount. The principal is also being paid in twenty-four equal quarterly installments commenced from Nov-23 after the expiry of the Grace Period. Total markup of PKR 368.4mln and total principal of PKR 50.6mln has been paid till date.