Lahore, March 15, 2023 (PPI-OT): Ever since the pandemic of Covid-19, the hotel sector has been under pressure. The relief provided by the regulator furnished much-needed respite to the players. While occupancy level became a challenge, the cost of doing business witnessed a constant rise. In full cognizance of the situation, the company was pursuing a sale plan of its fixed assets, primarily properties.
Post Covid-19, the operational cash flows improved, though these were considered insufficient by the management to make repayments. The management was hopeful to complete the sale transaction of the company’s properties to remain afloat. They were able to sell a few but some big large assets could not be disposed of as targeted.
Over the last couple of months and especially after the rise in political instability, unprecedented increase in interest rates and hyperinflation, the management started to face material uncertainty around the company’s operations, as disclosed in the recent published financial statements. This led to the revision and adjustment of ratings.
The management has represented that they have express intention to settle the debt, while aligning the financial obligations with the operational realities. A detailed plan is under discussion with lenders, wherein the company is settling the debt over the future course of time.
A sizeable portion of the debt would be linked with the sale of some of the prime properties that the company owns, while the rest would be aligned to the emerging pattern of cash flows. The management seems to be confident and committed about it. The success of these initiatives is crucial to the future ratings of the company; and hence sukuk. Sustainability of operations and materialization of optimal cash flows are important.
For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com