Gerbang Perdana CIQ Sdn Bhd’s (“Gerbang Perdana CIQ”) RM1.7 billion Seven Year Medium Term Notes (“MTN”) issuance programme has been assigned an AAA rating by MARC. The rating signifies the Government of Malaysia’s (“GOM”) unconditional and irrevocable obligation to repay the acknowledged sum on the stipulated date stated on the Facility Payment Certificate (“FPC”). Each FPC will then be assigned to each tranche of MTN where the payment date on the FPC shall be no later than the maturity date of the respective MTN to which it is linked to.

Proceeds from the MTN issuance programme totalling RM1.266 billion received by Gerbang Perdana CIQ, the special purpose vehicle set up for the financing exercise, will then be on-lent to Gerbang Perdana Sdn Bhd (“GPSB”) the turnkey contractor for the Gerbang Selatan Bersepadu Project (“GSB Project”). GPSB will use the proceeds to pay for the construction costs and other related expenses associated with the construction of the new Integrated Customs, Immigration and Quarantine Complex (“CIQ Complex”) at Bukit Chagar, Johor Bahru.

GPSB is a private limited company specifically incorporated to undertake the development of the GSB Project. Incorporated on 26 September 1998, GPSB has an issued and paid-up capital of RM18.4 million and RM7.6 million respectively as at 31 March 2004. GPSB is owned by a consortium of three companies led by Merong Mahawangsa Sdn Bhd with a 60% equity stake while the remaining 40% is equally shared by Detik Nagasari Sdn Bhd and DRB-HICOM Berhad. On 2 April 2003, GPSB received a Letter of Acceptance from Jabatan Kerja Raya for the construction of the CIQ Complex for a contract sum of RM1.266 billion. On 7 May 2003, both parties signed the CIQ Contract. Under the CIQ Contract, GPSB is responsible for the design, construction, completion and commissioning of the CIQ Complex comprising, among others, a new CIQ building and the Johor Bahru Sentral Terminal.

Any construction risk, faced by the MTN holders, associated with the GSB Project is fully mitigated by the financing structure. Under the proposed structure, Gerbang Perdana CIQ can only issue the MTNs once the GOM, via the Ministry of Finance, endorses the certified Interim Certificates by issuing the FPCs. The issuance of the Interim Certificates is contingent upon GOM’s full satisfaction on the construction work carried out on the CIQ Complex. Each FPC is linked to each tranche of MTNs issued and would represent an unconditional and irrevocable obligation on the GOM’s part to pay the acknowledged sum on the stipulated payment date stated on the FPC. Given the structure, note holders, therefore, are not exposed to termination/completion risk given GOM’s undertaking to pay GPSB notwithstanding any delay/cancellation of the project whether resulting from a breach by the contractor or the GOM. In addition, payment of monies under the FPC shall be made without deduction, set-off or adjustments.

Liquidity risk is moderated given that the source of repayment originates from the GOM. The creation of a security account by GPSB to receive payments directly from the GOM which shall then be used solely to repay Gerbang Perdana CIQ’s obligations due under the specific tranche of the MTNs protect note holders’ interests. Hence, the risk of competing claims from other creditors of Gerbang Perdana CIQ is mitigated.