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RAM Ratings reaffirms TRIplc Ventures’ AAA(fg)/Stable rating

Published on 08 Jun 2021.

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RAM Ratings has reaffirmed the AAA(fg)/Stable rating of TRIplc Ventures Sdn Bhd’s (TVSB or the Company) MTN Programme of up to RM240 mil in nominal value (2011/2026). The rating reflects the irrevocable and unconditional financial guarantee provided by Danajamin Nasional Berhad (rated AAA/Stable/P1 by RAM). 

TVSB is the concessionaire for the development and maintenance of Zone 1 Phase 2 of the Universiti Teknologi MARA (UiTM) campus in Puncak Alam, Selangor (the Project). This comes under the 23-year tripartite Concession Agreement (CA) between the Government of Malaysia (GoM) - as represented by the Ministry of Higher Education, UiTM and TVSB. Repayments on the MTN will be supported by TVSB’s steady cashflow in the form of monthly Availability Charges (ACs) under its concession.

Following the Project’s completion on 10 April 2014, TVSB is now entitled to monthly ACs for 20 years until April 2034. Concurrently, the Company also receives fixed Maintenance Charges (MCs) in return for maintaining the campus. Under the CA, the GoM may review the scope and rate of MCs every five years. There has been no change in the MCs after the initial five-year period that ended on April 2019. 

TVSB’s maintenance track record has been commendable to date. The Company has been able to keep its key performance indicators (KPIs) well above the targeted 93%. Failure to meet its KPIs will lead to demerit penalties and deductions of MCs. In 2020, net performance-related deductions stood at RM495k (3.63%) (2019: RM520k, 3.81%) due to a backlog of unresolved complaints from previous years.

Going forward, TVSB’s debt-servicing ability is anticipated to remain strong, with respective stressed minimum and average debt service coverage ratios (with cash, calculated over a 12-month period on profit/principal payment months) of 1.50 and 1.75 times. The Company is projected to generate RM35.4 mil-RM39.0 mil of annual pre-financing cashflow after paying its maintenance and administrative expenses.  

Timeliness of concession payments is key to the transaction as any delay may adversely affect TVSB’s debt-servicing aptitude and liquidity. The Company has been receiving prompt payments from UiTM to date.  

Meanwhile, certain incidents may lead to the termination of the concession. In the unlikely event of termination of the CA, concession payments will be disrupted and, in turn, jeopardise TVSB’s ability to meet its obligations. We highlight that the MTN holders will be protected in such an instance, whether due to non-performance by TVSB or UiTM. Given the non-complex maintenance services and the Company’s commendable track record, termination risk is deemed remote. 

As with other project financing transactions, TVSB is exposed to force majeure risk as it derives its income from a single project. The Company therefore maintains a comprehensive array of insurance policies to help protect itself against any resultant financial losses.

 

Analytical contact
Davinder Kaur Gill 
(603) 3385 2525
davinder@ram.com.my

Media contact
Padthma Subbiah
(603) 3385 2577
padthma@ram.com.my

 

The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.

RAM Ratings receives compensation for its rating services, normally paid by the issuers of such securities or the rated entity, and sometimes third parties participating in marketing the securities, insurers, guarantors, other obligors, underwriters, etc. The receipt of this compensation has no influence on RAM Ratings’ credit opinions or other analytical processes. In all instances, RAM Ratings is committed to preserving the objectivity, integrity and independence of its ratings. Rating fees are communicated to clients prior to the issuance of rating opinions. While RAM Ratings reserves the right to disseminate the ratings, it receives no payment for doing so, except for subscriptions to its publications.

Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.

Published by RAM Rating Services Berhad
© Copyright 2020 by RAM Rating Services Berhad



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