PECD Berhad’s (“PECD or the Group”) proposed Serial Fixed Rate Bonds Programme (“Serial Fixed Rate Bonds”) of RM200 million have been assigned a long-term rating of A. Proceeds from the issuance of the Serial Fixed Rate Bonds will be utilised towards the refinancing of the Group’s subsidiaries bank borrowings and for general working capital and investment requirements. PECD is an investment holding company listed on the Main Board of Bursa Malaysia Securities Berhad. The PECD Group is involved in three core businesses; construction, property development and the provisioning of engineering, procurement, construction and commissioning (“EPCC”) services for the oil & gas sector.

The assigned rating is supported by PECD’s competitive position within the construction industry as evident by the Group’s order book which is comparable to other construction companies rated by MARC, its ability to secure overseas contracts, long established track record in the Malaysian construction industry, competitive margin pricing and experienced management team allowing the Group to compete against its local peers in an open tender bidding process.

The construction business will be the main driver of the Group’s revenue with the property development and EPCC supplementing the Group’s earnings. As at May 2005, PECD’s outstanding order book of RM1.3 billion places the Group at par with other construction companies in MARC’s portfolio. The outstanding contracts are expected to sustain PECD’s earnings for the next two years. Locally, the biggest contract secured is the Kuala Lumpur Flood Mitigation (Package B) Project. The Group’s strategy to expand activities beyond the local shores has proven to be successful in weathering the slowdown in local construction scene. In year 2004, the PECD Group secured two overseas contracts, a building job in Dubai, United Arab Emirates and an EPCC project in the Republic of Sudan. Recently, PECD secured two other overseas jobs signifying its ability to compete internationally.

For FY2005, the Group expects to register revenue of nearly RM1.43 billion, largely underpinned by the Melut Basin project in Sudan as well as the Dubai International Financial Centre building. Moving forward, the bulk of revenue will continue to be derived from the construction business (inclusive of oil & gas sector) albeit at a declining rate. Property revenue will, in turn, gradually increase until FY2010 with the completion of most of the property phases under the Putrajaya project. Percentage wise, the construction sector is expected to account for the major share of Group revenue.

Under the issue structure, there is a maximum debt leverage covenant of 1.5x which takes effect on the first anniversary of the issuance of the bonds. According to projections, PECD’s gross debt leverage position as at 31 December 2005 is expected to reach 1.5x. Nevertheless, excluding the cash balances of the Group as defined in the issue structure, net debt leverage is expected to register at 0.98x. The paring down of the bonds via the serial redemption beginning in 2008 coupled with the expected accumulation of retained earnings are expected to reduce the Group’s debt leverage position gradually.