[RAM] Update: Northern Gateway's potential Event of Default resolved with noteholders extending conditions subsequent timeline
Noteholders have given Northern Gateway Infrastructure Sdn Bhd (the Company) an extension of time to meet the conditions subsequent (CS) under its RM340 mil Medium-Term Notes (MTN) Programme (2017/2034) (rated AA1/Stable by RAM Ratings). The CS is a requirement to be met after the MTN Programme is issued. Failure to meet the CS is tantamount to a breach of obligations and constitutes an Event of Default (EoD) for the transaction, if not remedied by 30 April 2022. The extension was obtained on 25 April 2022, after Northern Gateway secured a RM20.08 mil bank guarantee facility requested by noteholders, thus allaying near-term concerns over a potential EoD on the MTN Programme.
The CS requires the Company to 1) execute the lease and sub-lease agreements for Phase 2 of the project land under the transaction, and 2) assign the sub-lease agreement as security for the transaction (granting the security trustee a power of attorney). Given the extension, the Company now has up to 31 December 2022 to meet the CS. Difficulties to complete the transfer of specific Project land titles to the Federal Land Commissioner, particularly during the pandemic lockdowns, contributed to the delay in the CS being met.
Progress made to date is encouraging, with relevant land transfers completed and drafts of the documents to be signed already in circulation. Nevertheless, we will continue to monitor developments pending completion of the CS. For further details on the matter and the rating assigned to the MTN Programme, please refer to the media release published on 15 April 2022 (https://www.ram.com.my/pressrelease/?prviewid=5963).
Northern Gateway holds the concession for the design, development, construction and completion, and maintenance of the immigration, customs, quarantine and security complex in Bukit Kayu Hitam, Kedah, awarded by the Government of Malaysia (via the Ministry of Home Affairs).
Seri Nuralya Munawir
(603) 3385 2484
Davinder Kaur Gill
(603) 3385 2525
The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.