Press Release

JCR-VIS Assigns Ratings to International Brands Limited

Karachi, July 19, 2017: JCR-VIS Credit Rating Company Limited (JCR-VIS) has assigned preliminary rating of AA (Double A) to the proposed Sukuk issue of Rs. 4 billion of International Brands Limited (IBL). The outlook on the rating is ‘Stable’. Sukuk rating will be converted into final rating upon review of signed legal documents.

IBL operates under a holding company structure and has investments in a number of companies from different sectors including pharmaceuticals, food franchising, agrochemical, fertilizers, marketing, distribution and retail. Largest investment on balance sheet is in The Searle Company Limited (Searle) shares representing around two-third of total investments. Searle is a prominent player in the pharmaceutical sector and has strong financial & business risk profile which is a key rating driver.

The company intends to raise Rs. 4billion (inclusive of a green shoe option of Rs. 1.5billion) through a Sukuk issue with a tenor of 4 years. Proceeds of the Sukuk will be utilized for operational requirements and expansion of business. Principal repayment of the Sukuk is at maturity with annual profit payment frequency. Security structure of the Sukuk entails pledge of shares of Searle (based on one year average share price) with the trustee with 100% margin.

The Sukuk rating is dependent upon strict adherence to the following structural features of the Sukuk:
· The Sukuk issue will be repaid through a planned Initial Public Offering (IPO) to be completed prior to the expiry of the Sukuk. Fall back debt servicing of the Sukuk issue carries the feature of convertibility into shares of Searle, to the extent of any shortfall in principal and profit payment.
· The debt leverage of the company is not projected to increase beyond the existing level of debt (Rs. 1billion) plus projected Sukuk (Rs. 4billion).

For further information on this rating announcement, please contact the undersigned (Ext: 201) at 021-35311861-70 or fax to 021-35311873.

Javed Callea
Advisor

Applicable Rating Criteria: Rating the Issue (June 2016)
http://www.jcrvis.com.pk/Images/criteria_instrument.pdf

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. VIS, the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report. VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright July 19, 2017 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.