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Pakistan Credit Rating Agency Limited maintains ratings of Optimus Limited - Press Release issued by The Pakistan Credit Rating Agency Limited

June 26, 2014



Following is the text of press release issued by The Pakistan Credit Rating Agency Limited (PACRA)

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The Pakistan Credit Rating Agency (PACRA) has maintained the long-term and short-term entity ratings of Optimus Limited at "BBB+" (Triple B Plus) and "A2" (A Two), respectively. The ratings reflect that capacity for timely payments of financial commitments is adequate. Meanwhile, the rating for the Sukuk Issue of PKR 250mln has been maintained at "A" (Single A), denoting a strong capacity for timely payment.

The ratings reflect established market position of Optimus, supplemented by its sound business model, sizeable operational scale, and operational synergies arising from its association with Hertz Corporation - a global brand in car rental industry.

Although business volumes are expanding, pressure on margins, along with high finance cost is keeping profitability under check. Nevertheless, Optimus' subsidiary - Calcorp - is in profits, which enable it to avail tax benefit from available tax losses.

Meanwhile, increased leveraging, stressed cash flows, and less than adequate debt coverage signify financial risk. The company intends to gradually expand its operations, while keeping a close check on its cost structure to sustain margins. It is exploring various options, including new equity partners, to fuel fleet expansion and to refinance a portion of its debt repayments.

Given thin bottom-line margins, the company's ability to rationalize its overall financial profile, while improving operational profitability would be critical. Meanwhile, any increase in debt levels without adequate support from cash flows, compromising debt servicing capacity, would negatively impact the ratings.

For more information, contact:

Hammad Rashid

Analyst

The Pakistan Credit Rating Agency Limited (PACRA)

Awami Complex, FB1, Usman Block New Garden Town,

Lahore - Pakistan

Tel: +9242 586 9504 -6

Fax: +9242 583 0425

Email: hammad.rashid@pacra.com

Web: www.pacra.com

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Source: Pakistan Press International