RAM Ratings has reaffirmed the AA3/Stable rating of Cypark Ref Sdn Bhd's (Cypark Ref or the Issuer) RM550 mil SRI Sukuk Murabahah Programme (2019/2041) (the Sukuk). This is premised on Cypark Ref having sufficient liquidity to weather construction delays and the consequential revenue loss suffered by the three solar power projects being financed by the Sukuk. The estimated shortfall in cashflow will be restored by a RM15 mil cost waiver from the engineering, procurement, construction and commissioning (EPCC) contractor.
Cypark Ref is the appointed turnkey contractor and special-purpose vehicle set up to raise financing for three 30 MWac solar photovoltaic (PV) projects (the Projects). The Projects are separately owned by Viva Solar Sdn Bhd (in Sik, Kedah the Sik Plant), Cove Suria Sdn Bhd (in Danau Tok Uban (DTU), Kelantan originally Kelinchi Dam, Negeri Sembilan) and Cypark Estuary Solar Sdn Bhd (in DTU originally Terip Dam, Negeri Sembilan) - collectively known as the Project Companies.
As Cypark Ref's obligations under the Sukuk will be met by the respective turnkey contract payments due from the Project Companies, RAM's analysis focuses on the underlying project fundamentals and the ability of these companies to service their deferred Turnkey Contract payment obligations. Meanwhile, Cypark Ref has sub-contracted out the EPCC works of the Projects to its parent company, Cypark Renewable Energy Sdn Bhd (CRE or the EPCC Contractor).
CRE has provided an undertaking to irrevocably and unconditionally relinquish its rights to claim RM5 mil of progress payments under each of the Projects' EPCC contracts (total of RM15 mil) should their respective completion dates breach the targeted deadline of 4 June 2021. The sum can then be utilised towards the payment of the Sukuk obligations due in December 2021. This has effectively mitigated the projected liquidity shortfall under RAM's stressed case.
Notably, the construction progress of the Projects has been