MARC is issuing this update on its AA-/MARC-1 rating on IJM Corporation Berhad’s (IJM) RM300 million Commercial Paper/Medium Term Notes Programme in view of the Group’s proposed capital repayment exercise. MARC has retained its AA- long term and MARC-1 short term ratings after taking into consideration that the impact of the capital repayment on the Group’s profile will only be modest, thus, leaving its credit metrics relatively unaffected and well within the level appropriate for the AA-/MARC-1 rating. The outlook for the ratings remains stable.

IJM’s capital repayment exercise will involve the capitalisation of approximately RM442 million from its share premium account to be paid in cash to its entitled shareholders. The capital repayment will be funded through part proceeds from the disposal of IJM Properties Sdn Bhd and other IJM’s property assets to its Main Board listed subsidiary, RB Land Holdings Bhd (renamed as IJM Land Berhad) and additional bank borrowings. Despite the higher borrowings, IJM is expected to maintain a robust debt servicing capacity.

As one of Malaysia’s largest diversified companies with significant interests in construction, properties, plantation, manufacturing and infrastructure, IJM reported a 11% increase in revenues to RM1.22 billion for the first quarter ending in June 2008 (Q1 FY2009) as compared to corresponding quarter in FY2008. MARC draws comfort from IJM’s ability to maintain operating margins at a double-digit levels (FY2008:16.3%), manageable debt levels with large cash balances and a strong financial flexibility derived from unutilised credit lines. In addition, the Group’s earnings visibility is further underscored by an outstanding order book of RM5.0 billion.

Contacts:
Khairul Muzamel Perera  03-2090 2247/ kevinkhairul@marc.com.my
Francis Xaviour Joe  03-2090 2279/ fxjoe@marc.com.my