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MARC has downgraded the long term rating of Tracoma Holdings Berhad’s (Tracoma) RM100 million Al Bai’ Bithaman Ajil Islamic Debt Securities (BaIDS) to BID from BB+ID. At the same time, Tracoma’s rating was removed from MARCWatch Negative where it had been placed since July 25, 2008. The rating now carries a negative outlook.
The downgrade reflects heightened concerns over Tracoma’s ability to address the upcoming maturity of its first BaIDS series on January 28, 2009 amounting to RM50 million. Tracoma had earlier obtained a temporary waiver from BaIDSholders with respect to scheduled monthly sinking fund payments, pending a restructuring of its debt. The company continues to be under significant financial pressure despite some improvement in its operating performance in the first six months of 2008. The company’s financial flexibility remains limited, as evidenced by Tracoma’s inability to access additional funding while its liquidity remains inadequate in light of upcoming debt maturities. The negative outlook, therefore, incorporates the likelihood of the rating being lowered further in the event Tracoma fails to implement its debt restructuring scheme ahead of the upcoming debt maturity. |
