MARC has assigned AAIS to Diversified Venue Sdn Bhd’s (“DVSB”) RM200 million Sukuk Al-Ijarah Master Program. The rating reflects the quality of the Assets and the strength of the Liquidity Support Provider and Purchase Undertaking Provider, United Engineers (Malaysia) Berhad (“UEM”). UEM is a well diversified conglomerate with its principal activities spanning construction, expressway operation, engineering and services, healthcare and cement manufacturing. UEM is also the intermediate controlling shareholder of several listed companies namely UEM World Berhad (50.8% shareholdings), Plus Expressways Berhad (40.2% shareholdings), Pharmaniaga Berhad (72.6% shareholdings by UEM World Berhad), UEM Builders Berhad (51.7% shareholdings by UEM World Berhad), Cement Industries of Malaysia Berhad (53.6% shareholdings by UEM World Berhad), Opus International Group plc (62.37% shareholdings by UEM World Berhad), Time Engineering Berhad (45.2% shareholdings) and Time Dotcom Berhad (43.83% shareholdings by Time Engineering Berhad). UEM being an investment holding company (rated AA flat) derives most of its revenue from dividend up streaming from its operating subsidiaries. MARC takes comfort that UEM is a wholly owned subsidiary of Khazanah Nasional Berhad (“Khazanah”), the investment arm of the Government of Malaysia. The rating however is moderated by the group’s exposure to the cyclical engineering and services, construction and cement manufacturing which together contributes 53.9% of its revenue for the FY2005.

Under this transaction, a special purpose vehicle, DVSB will acquire UEM Group Headquarters Building from First Impact Sdn Bhd (“FISB”) and subsequently lease the property to the seller for the benefit of the Sukuk holders. The purchase of the properties will be funded by proceeds from issuance of RM200 million Sukuk Al-Ijarah Master Program. Repayment of the Sukuk will be funded by periodic lease payments made by the lessees (also the sellers) to DVSB as well as proceeds from either the repurchase option should it be exercised by UEM. Each sale by FISB will only be of the beneficial ownership and FISB will remain as the legal owner of the Land and Building Parcels the rights in, title to and interest in the building being retained by FISB. FISB will hold the same on trust for the Issuer under the terms of the Master Purchase Agreement. The Issuer, will hold the beneficial ownership of the Land and Building Parcels on trust for the investors in the Sukuk under the terms of the Declaration of Trust.

The underlying asset is the group headquarters of UEM and has a net floor area of 303,099 sq. feet and 276 car park bays. Other amenities include a multi purpose hall with a capacity for 500 persons, facilities for conference and seminar, cafeteria and retail lots. DVSB will lease the property to the sellers under a lease agreement and the lease agreement will at least matched the maturity of the Sukuk. The lease payments payable by the lessees will be supported by United Engineers (Malaysia) Berhad, under the Liquidity Facility Agreement. The lease agreement will be on a net lease basis whereby the lessee is responsible for all costs and expenses relating to the properties including costs of repairs and maintenance. Lease rental payments to DVSB are not subjected to set-off, deduction and counterclaim. Since majority of the tenant mix would be from companies within the UEM Group, the main source of the lease payments would be from UEM. Furthermore, UEM has undertaken, pursuant to the Liquidity Facility Agreement, to provide financial support to FISB to meet its obligations under the Ijarah Documents. UEM has also given its undertaking to purchase the underlying asset upon the occurrence of Dissolution Event or upon maturity of the notes.

The construction of the building would be undertaken by UEM Construction Sdn Bhd (“UEMC”), a subsidiary of UEM Builders Berhad. Some of the notable projects completed by UEMC include the electrified double track from Rawang to Ipoh, design and construction of 6 hospitals in East Malaysia, design and construction and interior design works of government building in Precinct 2, Putrajaya and the Doha College of Technology in Qatar. Upon completion, the building would be managed by Opus International (M) Berhad (“OIMB”), a subsidiary of Opus International plc. Among the maintenance work undertaken by OIMB is the maintenance of the North-south Expressway under a Network Maintenance Management contract.