Tuesday, November 16, 2010

MARC places Emas Kiara debt rating on MARCWatch Developing

KUALA LUMPUR: Malaysian Rating Corp Bhd (MARC) has placed its MARC-2ID/AID ratings on EMAS KIARA INDUSTRIES BHD []'s RM80 million debt notes on MARCWatch Developing after it proposed to divest its geosynthetic manufacturing business.

MARC said on Tuesday, Nov 16 the debt notes were the partially underwritten murabahah notes issuance facility/Islamic medium term notes issuance facility (MUNIF/IMTN).

The MARCWatch placement follows Emas Kiara's proposed divestment of its geosynthetic manufacturing business to Tencate Geosynthetics Asia Sdn Bhd,a subsidiary of Netherland-based Royal Ten Cate N.V.

"The MARCWatch reflects the possibility that the transaction may not proceed as expected and the uncertainties that it will generate with respect to the operating profile and earnings generation ability of Emas Kiara following the disposal of its core operating business," it said.

Emas Kiara expects to realise cash proceeds of RM100.0 million which it plans to use to repay its bank loans and the RM50.0 million outstanding under the rated facilities.

The transaction is expected to be completed by early 2011, subject to the approval of EKIB's shareholders and relevant authorities amongst other things.

However, MARC drew comfort from the liquidity that will be generated from the sale of Emas Kiara's geosynthetic manufacturing business and the company's plan to retire its existing debts, including the rated facilities.

Emas Kiara expects to repay the rated facilities in full within 12 months from the completion of the disposal.


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