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Maju’s RM550m Islamic debts placed on MARCWatch Negative
by Cals Fri 06 Sep 2013, 10:50
Maju’s RM550m Islamic debts placed on MARCWatch Negative
Business & Markets 2013
Written by Cynthia Blemin of theedgemalaysia.com
Friday, 06 September 2013 10:02
KUALA LUMPUR: Malaysian Rating Corp Bhd (MARC) has placed its AA-ID rating on Maju Expressway Sdn Bhd’s (MESB) RM550 million Islamic Medium Term Notes (IMTN) programme on MARCWatch Negative.
MESB is 96.8% owned by Maju Holdings Sdn Bhd, which is owned by steel tycoon Tan Sri Abu Sahid Mohamed, who controls Perwaja Holdings Bhd and KINSTEEL BHD [].
MESB holds the concession for the 26km Maju Expressway (MEX), which links the Kuala Lumpur city centre to Putrajaya and Cyberjaya.
In a statement yesterday, MARC said the rating watch was precipitated by concerns over expected increases in financial leverage, potential pressure from its parent Bright Focus Bhd to return surplus cash to shareholders following the parent’s proposed sukuk issuance of up to RM1.35 billion, and the delay in providing information for MARC to complete its scheduled annual rating review of the IMTN issuance.
MARC said Bright Focus is expected to use part of the proceeds from the proposed issuance to fund the purchase of MEX’s outstanding RM550 million rated notes.
The balance is to be used for the CONSTRUCTION [] of the expressway’s new Sri Kembangan interchange and toll plaza as well as to meet Bright Focus’ funding requirements, it added.
MARC said the construction of the interchange will raise the project’s risk profile as the proposed development may result in near-term construction risk and uncertainty for the expressway’s traffic demand and revenue forecasts.
To date, MESB has not made available to MARC the revised traffic forecast incorporating the impact of the new interchange.
MESB’s leverage is expected to increase due to advances that will be made by the parent company to the 96.8% owned subsidiary to fund the construction of the new interchange, it said.
“As a result of the expected increase in consolidated leverage, debt service protection margins will foreseeably be reduced, lowering MESB’s resilience in the event the actual traffic and revenue are significantly lower than projections,” MARC said.
This article first appeared in The Edge Financial Daily, on September 06, 2013.
Business & Markets 2013
Written by Cynthia Blemin of theedgemalaysia.com
Friday, 06 September 2013 10:02
KUALA LUMPUR: Malaysian Rating Corp Bhd (MARC) has placed its AA-ID rating on Maju Expressway Sdn Bhd’s (MESB) RM550 million Islamic Medium Term Notes (IMTN) programme on MARCWatch Negative.
MESB is 96.8% owned by Maju Holdings Sdn Bhd, which is owned by steel tycoon Tan Sri Abu Sahid Mohamed, who controls Perwaja Holdings Bhd and KINSTEEL BHD [].
MESB holds the concession for the 26km Maju Expressway (MEX), which links the Kuala Lumpur city centre to Putrajaya and Cyberjaya.
In a statement yesterday, MARC said the rating watch was precipitated by concerns over expected increases in financial leverage, potential pressure from its parent Bright Focus Bhd to return surplus cash to shareholders following the parent’s proposed sukuk issuance of up to RM1.35 billion, and the delay in providing information for MARC to complete its scheduled annual rating review of the IMTN issuance.
MARC said Bright Focus is expected to use part of the proceeds from the proposed issuance to fund the purchase of MEX’s outstanding RM550 million rated notes.
The balance is to be used for the CONSTRUCTION [] of the expressway’s new Sri Kembangan interchange and toll plaza as well as to meet Bright Focus’ funding requirements, it added.
MARC said the construction of the interchange will raise the project’s risk profile as the proposed development may result in near-term construction risk and uncertainty for the expressway’s traffic demand and revenue forecasts.
To date, MESB has not made available to MARC the revised traffic forecast incorporating the impact of the new interchange.
MESB’s leverage is expected to increase due to advances that will be made by the parent company to the 96.8% owned subsidiary to fund the construction of the new interchange, it said.
“As a result of the expected increase in consolidated leverage, debt service protection margins will foreseeably be reduced, lowering MESB’s resilience in the event the actual traffic and revenue are significantly lower than projections,” MARC said.
This article first appeared in The Edge Financial Daily, on September 06, 2013.
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