The rating of BBB- (minus) assigned to Mithril Berhad’s (Mithril) Irredeemable Convertible Unsecured Loan Stocks (ICULS) reflects the assurance of returns and maintenance of terms of the ICULS, that is, the likelihood of interest payments for five years and the solvency of Mithril at time of mandatory conversion to enable it to honour its obligation to deliver the shares. The ICULS are rated one notch lower than Mithril’s RCSLS, which carries a rating of BBB from MARC, reflecting the greater credit risk ICULS carries because of the subordination of ICULS to RCSLS, in terms of entitlement to returns during appropriation of earnings.

Mithril was incorporated as a shell company in April 2002 to facilitate the proposed restructuring exercise of Tajo, which is an affected listed issuer pursuant to the KLSE’s Practice Note 4/2001 (PN4/2001). The restructuring exercise involves the proposed capital reconstruction and cancellation of share premium account of Tajo; scheme of arrangement; fund raising exercise (including the issuance of the RCSLS and ICULS); acquisition of Saferay (M) Sdn Bhd (Saferay) & Menara MAA in Kota Kinabalu and Kuching; and debt settlement of Tajo’s secured and unsecured creditors.
Upon the completion of the restructuring exercise, Mithril will hold 100% stake in Tajo and assume the latter’s listing status. The business activities of Mithril will comprise manufacturing and trading of architectural mouldings (under Saferay); leasing of commercial properties; and manufacturing, distribution and selling of bricks (under Tajo). Under the conditional sale and purchase agreement between Mithril and Saferay’s vendors, the latter have provided a guarantee that the aggregate post-tax profit of Saferay shall not be less than RM18 million for the next three financial years (30 April 2003 – 30 April 2005). Besides Saferay, Mithril will also assume the main business of Tajo, as a brick manufacturer.

Mithril will also be involved in leasing of commercial properties, mainly the two Menara MAA in Kota Kinabalu and Kuching. Under the proposed restructuring exercise, Mithril & Tajo have executed conditional sale & purchase agreements with the building owner, Malaysian Assurance Alliance Berhad (MAA); the owner will grant Mithril & Tajo a fixed term lease of five years that would provide a stable income stream to Mithril.