Published on 20 Sep 2023.
RAM Ratings has revised from negative to stable the outlook on the AA2 rating of Konsortium ProHAWK Sdn Bhd’s (ProHAWK or the Company) RM900 mil Islamic Medium-Term Notes (IMTN) Programme (2013/2033).
This follows the execution of a Supplementary Concession Agreement (SCA) between the Government of Malaysia and the Company last month. Under the agreement, ProHAWK is entitled to additional revenues from 2019 to 2028 for the wider scope of information and communications technology (ICT) operations and maintenance services (OMS) rendered. Since the start of the Asset Management Services (AMS) period under the concession, the Company had incurred additional operational expenses amounting to approximately RM6 mil annually for work beyond the original scope of ICT OMS. The Company received RM27.35 mil in retrospective revenues on 30 August 2023 for the 2019 to 2022 period. The revision of ICT OMS payments for 2029 onward will be negotiated at a later stage.
The execution of the SCA would improve ProHAWK’s debt servicing ability. Under RAM’s cash flow sensitivity analysis, we have assumed a three-month delay in the receipt of concession payments and applied RAM’s stressed reinvestment rate as well as additional revenues for 2023 received by ProHAWK in the next year. This, coupled with contractual Availability Charges and revised AMS charges, restores ProHAWK’s Finance Service Coverage Ratio to a projected minimum of 1.5 times for the tenure of the IMTN, commensurate with an AA2 rating. ProHAWK’s improved debt servicing ability also resolves temporary shortfalls in the Company’s Finance Service Reserve Account balances, which were previously supported by standby letters of credit from UEM Group Berhad, its major shareholder.
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Thong Mun Wai
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Ratings on Konsortium ProHAWK Sdn Bhd