Jana Niaga Sdn Bhd (“JNSB”) RM100 million Murabahah Underwritten Notes Issuance Facility’s (“MUNIF”) rating has been downgraded to MARC-3ID from MARC-2ID (2004). The rating action stems from the failure by Universiti Industri Selangor (“UNISEL”) to meet the minimum rental payments guaranteed (based on guaranteed student numbers and full occupancy of staff housing) under a concession to build and operate student hostels at UNISEL’s main campus in Kuala Selangor, and the university’s failure to meet prorated maintenance charges due to JNSB, under a maintenance agreement executed with the award of the concession.

JNSB is a special purpose vehicle which was awarded a 20-year concession by UNISEL, a wholly-owned subsidiary of the Selangor State Government, to build and operate student hostels, staff accommodation, a child care centre, a student community centre and a student centre for the University. At the end of the concession period, all the buildings will be transferred to UNISEL. As compensation for building and maintaining the buildings, JNSB will receive rental payments for the hostels and the other buildings on a semester basis over the tenure of the concession. A minimum rental payment of RM11.315 million per annum has been guaranteed by UNISEL; based upon a total of 5,000 students and the total space occupied by UNISEL’s staff. Additionally, JNSB’s maintenance for the main campus is based on a monthly fee of RM482,719. Together, these receipts will serve to support the projected revenue base of JNSB as well as the debt servicing capacity of the company.



With its focus on marine related tertiary education, UNISEL has been appointed as the anchor consultant for the Selangor Maritime Corridor. Employment opportunities within the corridor will thus be available to the university’s future graduates. As at November 2005, UNISEL’s main campus had 3,172 enrolled students and this number is expected to grow to over 5,000 by July 2006 when UNISEL’s Engineering and Biotech Faculties are relocated from UNISEL’s City Campus at Shah Alam to the main campus. Besides student fees, UNISEL’s other source of income is in the form of grants from the Selangor State Government, to cover the university’s operational and research & development expenditure.

THG Construction Sdn Bhd (“THGC”) was appointed as the turnkey contractor for this project. The project was completed in July 2005, after a delay of more than one year from the initial targeted completion date of May 2004. This was due to a delay in UNISEL’s campus construction, as both the campus and hostel had to be completed concurrently. No liquidated ascertained damages were paid by JNSB. In July 2005, the hostel was opened for student registration upon partial completion of the campus and the concession period officially started in August 2005.

As at 30 April 2006 a total amount of RM8.48 million was due pursuant to the concession agreement with a further RM1.47 million invoiced as maintenance fees. UNISEL has only managed to pay RM2.51 million to JNSB which translates to a shortfall of RM7.44 million. This has put a severe strain on the company’s cash flows. JNSB is reviewing options available to it to recover the shortfall.