PETALING JAYA: Bright Focus Bhd, the concession holder of the Maju Expressway (MEX), has proposed to restructure its Islamic debt papers in a bid to boost its rating back to investment grade.
Bright Focus on Sunday has proposed to buyback its current outstanding sukuk of RM1.225bil at its full nominal or par value. It plans to replace the sukuk with a proposed issuance of new sukuk.
"Bright Focus Berhad has engaged several international banks to implement the proposed restructuring scheme within the next 90 days, subject to the necessary due diligence by the banks," it said in a statement.
The sukuk swap proposal came after RAM Ratings in June downgraded Bright Focus' sukuk to BB1 from A1.
The downgrade was due to the company's reduced cash reserves following unscheduled advances to Maju Holdings.
Bright Focus is a wholly owned subsidiary of Maju Holdings, in which Tan Sri Abu Sahid Mohamed is executive chairman.
Earlier this month, StarBiz reported that the sukuk's trustee, on behalf of the sukukholders, is pursuing legal action to recover RM97.02 mil of advances made by Bright Focus to Maju Holdings in 2018.
"The current downgrade to BB1 is not reflective of the highway itself, but the weak structure of the terms of the sukuk itself," Bright Focus said.
On a standalone basis, the MEX highway is a performing highway from a perspective of its ability to meet all its obligation under the current sukuk in a timely manner.
In the latest rating rationale report, Ratings Agency Malaysia has highlighted that the projected cashflows were subjected to stress assumptions and the lowest point in the debt service coverage ratio is 1.20 times.
Any measure above one time indicates ability to repay obligations in a timely manner.
"Bright Focus Bhd and by virtue of that Maju Holdings Sdn Bhd is in a solid financial position to undertake this restructuring programme, which will address the weakness in the current terms of the sukuk," the company said yesterday.
"The Group is committed to good corporate governance practices and will ensure that sukukholders interests are protected and all obligations are repaid in full in a timely manner," it added.
Once the proposed restructuring is completed, the group expects to see an improvement in its rating for the sukuk.