MARC has reaffirmed the rating of KLSSB’s Tranche 1 BaIDS of RM91 million. On 21 October 2003, UDA Holdings Berhad (UDA) had entered into a Subscription Agreement with Harmonic Fairway Sdn Bhd, Malaysian Resources Corporation Berhad (MRCB) and PQSB to subscribe for the issuance of new 15,000,000 ordinary shares of RM1.00 each of PQSB for RM15.0 million, representing approximately 100% of the enlarged share capital of PQSB. The said shares subscription by UDA will enable it to ultimately own Lot G. Consequently, upon completion of the Subscription Agreement, UDA will be providing the required loans (“Advance”) for PQSB to settle the balance of RM125 million owing to KLSSB to complete the Lot G acquisition. The above share subscription and Advance are pending the approval from shareholders of UDA and the FIC. The ratings for tranches 2A, 2B, 3, 4A & 4B BaIDS totaling RM800 million remain unchanged at AID(s), reflecting the support provided by Bank Pembangunan & Infrastruktur Malaysia Berhad (BPIMB) by way of a standby revolving credit facility.

Kuala Lumpur Sentral’s commercial development is divided into four phases. As at 30 November 2003, the aggregated confirmed sales stood at RM789.6 million, of which RM162.1 million remained unbilled. The official launch of Plaza Sentral II in September 2003 is expected to boost the revenue of KLSSB for 2004. Phases 2, 3 and 4 constitute the future development of office towers over a 10-year period. Developments for these phases have not commenced.

KLSSB’s revenue dipped by almost 61% to RM27.3 million in FYE December 2003 from RM69.9 million previously. The huge reduction in revenue is mainly due to lower sales made. Low revenue compounded with high financing costs (related to the BaIDS facility) led to a loss before tax of RM47.1 million for the 16-month period ending 31 December 2003. KLSSB’s debt leverage worsened to 6 times, due mainly to continuous depletion to retained earnings and the unsettled portion of the tranche 1 BaIDS. KLSSB’s shareholders’ funds deteriorated to RM89.2 million (FY2002: RM137.5 million), due primarily to losses reported in FY2003. KLSSB’s cash flow position is expected to continue to be weak due to high borrowing costs.

The support from BPIMB is pivotal in ensuring the timely payment of the remaining BaIDS facility.