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Pakistan Credit Rating Agency emphasizes Rating Watch Of Worldcall Telecom Limited

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by July 6, 2012 General

Karachi, July 06, 2012 (PPI-OT): Worlcall has been facing liquidity problems amidst business and financial challenges. In this regard, the key sponsor of the company – Omantel – committed to help company raise US$70mln in two tranches. During 2011, first tranche (US$ 35mln) was received by the company in the form of loan guaranteed by Omantel. The amount was mainly used in meeting financial obligations, while supporting working capital needs to some extent.

The second tranche of US$35mln to be issued in the form of convertible preference share, is to be used partially for meeting debt obligations, while mainly supporting the company’s capex needs. However, the flow of this amount has met delays for various reasons in the past.

Lately, though respective arrangements with Omantel and commercial banks are in place, Worldcall is facing delays in getting certain regulatory approvals.

The regulatory approvals are taking more than expected time. With limited internal generation, WTL is unable to meet due installment of its outstanding TFC without this inflow. Cognizant of this the management has requested the investors of TFC III (Outstanding amount: PKR 2,178mln) for a grant of additional 45 days grace period (ending August 05, 2012) for redemption of due installment (Principal: PKR 545mln; Interest: PKR 148mln).

The management expects to resolve the matter with regulatory bodies within this timeline. The ratings of WTL [Long Term: ‘BB+’ (Double B Plus), Short Term: ‘A3’ (A Three), TFCs: ‘BB+’ (Double B Plus)] will continue to be on Rating Watch with negative outlook. Any further delay in flow of money to WTL is likely to trigger negative rating action.

For more information, contact:
Hammad Rashid
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com

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