MARC has reaffirmed the rating of MARC-4ID assigned to Pembangunan Brisdale Sdn Bhd’s (PBSB) RM55 million Murabahah Notes Issuance Facility (MUNIF). The rating reaffirmation is based on PBSB’s request for the notes outstanding under the MUNIF programme expiring on 30 August 2004 to be restructured so as to vary some of the terms under the original principal terms and conditions. The request was made by PBSB following the re-planning of Bandar Armada Putra project where in doing so PBSB had envisaged that the outstanding notes would not be able to be redeemed by the said date.

The development of the residential projects at Bandar Armada Putra did not progress according to expectations due to the financial difficulties faced by PBSB. As a consequence, PBSB and its holding company Brisdale Holdings Berhad (BHB) made a strategic decision to focus on the completion of the existing phases of the residential developments and defer to a later date the launching of the remaining residential properties.

To-date, all of the existing residential phases have been completed. About half of the residential properties were issued with their certificates of fitness (CF) in the middle of last year while the remaining phases are expected to be issued with their CFs either by the end of the year or early 2005.

Under the original terms and conditions of the MUNIF programme, secured sales under the Bandar Armada Putra project are to serve as the source of repayment of the MUNIF. However, the decision to defer several phases of the residential projects resulted in a corresponding reduction in the sales revenue expected from this development. Notwithstanding the said decision, PBSB was still able to redeem some of the notes under the MUNIF, paring down the facility amount from RM55 million to RM32 million as at end of September 2004.

The MUNIF was originally scheduled to expire on 31 August 2004. PBSB had earlier reduced the outstanding figure under the MUNIF by RM16 million to RM39 million. In light of this, Kumpulan Hartanah Selangor Berhad, the ultimate holding company of PBSB through BHB (after the merger exercise) agreed with Abrar Discounts Berhad (ADB) in its capacity as the sole noteholder to assist PBSB in the settlement of PBSB’s debts and accordingly presented a proposal to ADB to resolve the same. On 27 August 2004, ADB approved the proposed variations to some of the terms and conditions of the MUNIF. These included extending the tenure of the MUNIF to 31 March 2006; adopting a revised sinking fund schedule and assigning sales proceeds from a land sale by BHB to Alphaprise Sdn Bhd. Additionally, ADB would also not proceed to declare the Cancellation of Event pending the Securities Commission’s approval of the proposal.

Revenue for FY2003 was minimal during the year since the future launches had already been deferred. However, due to lower operating expenses, PBSB posted lower loss before tax compared to the previous corresponding period. Although PBSB’s borrowings had declined, the loss position eroded shareholders’ equity and increased PBSB’s debt-to-equity ratio. Notwithstanding the above situation the FY2003’s debt-equity ratio was still observed and maintained at 1.5 times, the covenanted cap under the issue structure.