Weststar helicopter project carries RM6.41bil price tag
KUALA LUMPUR: Weststar Aviation Sdn Bhd's helicopter supply and maintenance concession for the government carries an estimated project cost of RM6.41 billion.
MARC Ratings stated that this will be financed through a RM5.76 billion sukuk programme and RM640.5 million in shareholder equity.
MARC assigned a preliminary AA+IS rating with a stable outlook to Weststar Aviation's proposed sukuk of up to RM6 billion.
Under the 18-year concession administered by the National Security Council (MKN), Weststar Aviation will supply and maintain 28 helicopters for six government agencies involved in defence, security and emergency response operations.
The project also includes training for more than 1,440 pilots, crew members and engineers.
The helicopters will be deployed for utility missions, search and rescue operations, medical evacuations, security patrols and training.
MARC said the rating reflects strong and predictable cash flows from the government, the established operating track record of Weststar Aviation's parent Weststar Aviation Services Sdn Bhd (Weststar) and the manufacturing and delivery capabilities of helicopter maker Leonardo SpA.
However, these strengths are moderated by execution risks during the delivery phase, stringent aircraft availability requirements and potential delays in concession payments.
The sukuk will be issued progressively throughout the helicopter delivery period.
The first issuance of about RM3.83 billion, expected in 2026, will refinance existing syndicated facilities, partially reimburse eligible shareholder advances from the parent company and meet remaining initial project requirements.
Weststar will subsequently draw on a separate revolving credit facility to finance the remaining capital expenditure in 2027 through shareholder financing and advances to Weststar Aviation.
Subsequent sukuk issuances totalling about RM1.93 billion are expected in 2027 to refinance these advances.
Weststar has also committed additional shareholder support of up to 10 per cent of the total project cost to cover potential cost overruns, sukuk profit payments, fees and expenses.
MARC said debt servicing will be supported by fixed monthly concession payments for each helicopter, irrespective of flight-hour utilisation, subject to stipulated availability requirements.
Principal repayments are expected to begin in 2028 after all 28 helicopters are delivered, peaking at about RM515 million annually between 2031 and 2035.
The minimum and average finance service coverage ratios, including cash balances, are projected at 2.61 times and 3.59 times respectively between FY2028 and FY2039, comfortably above the minimum requirement of 1.65 times.
Execution risks are considered manageable, with all helicopters scheduled for delivery by December 2027, six months ahead of the concession deadline of June 2028.
The first helicopter for the Prime Minister's Department was delivered on Oct 15, 2026, followed by the first of two helicopters for the Fire and Rescue Department on Nov 1.
The second is scheduled for delivery in December, while the remaining 25 units are expected progressively throughout 2027.
