MARC has downgraded Jana Niaga Sdn Bhd’s (“JNSB”) RM100.0 million Murabahah Underwritten Notes Issuance Facility (“MUNIF”) from MARC-3 ID to MARC-4ID following the failure of University Industri Selangor (“UNISEL”) to make good outstanding guaranteed rental payments amounting to RM8.7 million (as at October 2006) by 31 January 2007. In December 2006, the rating was placed on MARCWatch Developing when JNSB received written confirmation from UNISEL that all outstanding guaranteed rental payments will be paid by 31 January 2007, with downgrade implications if payment was not received by the appointed date. MARC revised JNSB’s MUNIF from MARCWatch Developing to MARCWatch Negative following an announcement in December 2006 by Abrar Discount Berhad (“ABRAR”), the sole note holder and underwriter for the facility, of its intention to cease operations. However, MARC understands from ABRAR that the cessation would not have an impact on the roll over of the MUNIF in the near term.

The MUNIF had been downgraded in May 2006 from MARC-2 ID to MARC-3 ID following JNSB’s deteriorating cash flow position arising from the failure of UNISEL to meet guaranteed rental payments. UNISEL has been unable to pay JNSB the guaranteed rental sums amounting to approximately RM943,000 per month and the yearly RM1.47 million maintenance fee since the commencement of the hostel in August 2005.

UNISEL has committed in writing their intention to settle all the outstanding sums owing to JNSB. In the letter dated 19 March 2007, UNISEL indicated that the outstanding sums would be settled using financing obtained from Affin Investment Bank Berhad. A payment of RM9.08 million made in March 2007, utilising the above facility, only covered payments up to December 2006 but guaranteed rental payments from beginning of 2007 to-date remain outstanding and in arrears.