Gerbang Perdana CIQ Sdn Bhd’s (“Gerbang Perdana CIQ”) RM1.7 billion Seven Year Medium Term Notes (“MTN”) issuance programme rating has been affirmed at AAA 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 Facility Payment Certificates (“FPC”), issued in satisfaction of progress work completed. Each FPC will then be assigned to each tranche of MTN as security to the note holders and payments received from the GOM shall form the repayment source for the respective tranche of MTNs to which it is linked to (the payment date on the FPC shall be no later than the maturity date of the respective MTN).


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 first part of the GSB Project, which is the new Integrated Customs, Immigration and Quarantine Complex (“CIQ Complex”) at Bukit Chagar, Johor Bahru. In April 2006, the second part of the GSB Project i.e. the proposed Bridge Project was scrapped by the Government of Malaysia (“GOM). GPSB is negotiating with the GOM for claims under the termination. MARC sees no material impact on the current rating arising from the cancellation of the Bridge Project.


GPSB is a private limited company specifically incorporated to undertake the development of the GSB Project. GPSB’s issued and paid-up capital stood at RM18.4 million and RM7.6 million respectively as at 31 May 2006. GPSB is owned by a consortium of three companies led by Merong Mahawangsa Sdn Bhd with a 60% equity stake, with the remaining 40% equally owned by Detik Nagasari Sdn Bhd and DRB-HICOM Berhad.

The construction risk associated with the GSB Project is fully mitigated by the financing structure. Under the 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 issuances of the Interim Certificates are contingent upon GOM’s confirmation that the construction work relating to a particular interim certificate meets with the satisfaction of the GOM. Each FPC is linked to a tranche of MTNs issued and represents an unconditional and irrevocable obligation on the GOM’s part to pay the acknowledged sum on the stipulated payment date stated on the FPC. Based on the structure, note holders are therefore not exposed to termination/completion risks 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.

The completion date for the project has been extended to 30 September 2006 from the initial completion date of 31 October 2005 due to a delay caused by the relocation of Singapore’s Public Utilities Board (“PUB”) water pipes.

Credit risk is minimal, as the source of repayment originates from the GOM. Additionally, the creation of a security account by GPSB to receive payments directly from the GOM which shall then be used to solely repay Gerbang Perdana CIQ’s obligations due under the specific tranche of the MTNs, also protects note holders’ interest.