Tuesday, Apr 22, 2003
MARC has affirmed the rating of RBM’s RM400 million Repackaged Income Securities (2001-2006) of A+(s) (single A plus, support). The affirmed rating reflects RBM’s competitive position in the civil engineering and building segment, good track record, experienced management team and a tight issue structure. The rating also reflects the shareholder support of up to a maximum RM200 million on a reducing balance provided by the holding company, Road Builder (M) Holdings Bhd (RBH). Limiting credit considerations include the inherent cyclicality of the construction industry, RBM’s increased debt leverage upon issuance of the bonds and the industry’s high working capital requirements.
RBM, a wholly-owned subsidiary of listed RBH, is one of the established construction companies in the country with experience in a wide range of civil engineering and building projects. Its competitive position is supported by its ability to undertake various construction projects, favourable track record of quality work and timely completion of projects and good financial resources. RBM’s growing participation in international markets has helped to supplement its earnings base and provide it with an element of diversification as it consolidates itself in a competitive domestic market.
RBM’s list of completed projects in the domestic market include the Seri Saujana Bridge in Putrajaya, Sungai Besi Highway, the National Sports Complex Phase 1A and Aquatic Centre in Bukit Jalil and the Commuter Rail Station in Kuala Lumpur International Airport. On the international front, RBM has completed and secured a number of highway contracts in India, involving the widening and strengthening of roads. Its most recent venture involves two new highway contracts in Maharasthra and Kerala.
Coupon payments under the bonds are supported by a liquidity buffer maintained in a Debt Service Reserve Account equivalent to one full bond coupon payment. In respect of the principal repayment, RBM is required to build up funds in a Sinking Fund Account at six-monthly intervals, beginning the 13th month from the date of issuance. In the event of a shortfall in the account, the holding company is required to cover such shortfall, subject to a limit of RM200 million which shall be stepped down over the tenure of the facility corresponding to the build up of funds in the account. Essentially, bondholders have priority interest over the company’s funds by operation of the payment waterfall established under the issue structure.
RBM’s revenue has been on the rise over the past two fiscal years with revenue reaching RM670 million in FY2002 (FY2001: RM320 million). Its 2002 performance is by far its best. In the intermediate term, RBM’s outstanding order book in excess of RM1.7 billion as at 31 December 2002 is expected to sustain the company’s revenue base for the next 3 years.
Following the issuance of the bonds, RBM’s debt leverage escalated to 2.0 times in FY2002 from 0.4 times in FY2001. This is still below the debt leverage cap of 3.0 times imposed under the issue structure. The gradual build up of funds in the Sinking Fund Account will effectively reduce bondholders’ risk over the tenure of the facility.
RBM, a wholly-owned subsidiary of listed RBH, is one of the established construction companies in the country with experience in a wide range of civil engineering and building projects. Its competitive position is supported by its ability to undertake various construction projects, favourable track record of quality work and timely completion of projects and good financial resources. RBM’s growing participation in international markets has helped to supplement its earnings base and provide it with an element of diversification as it consolidates itself in a competitive domestic market.
RBM’s list of completed projects in the domestic market include the Seri Saujana Bridge in Putrajaya, Sungai Besi Highway, the National Sports Complex Phase 1A and Aquatic Centre in Bukit Jalil and the Commuter Rail Station in Kuala Lumpur International Airport. On the international front, RBM has completed and secured a number of highway contracts in India, involving the widening and strengthening of roads. Its most recent venture involves two new highway contracts in Maharasthra and Kerala.
Coupon payments under the bonds are supported by a liquidity buffer maintained in a Debt Service Reserve Account equivalent to one full bond coupon payment. In respect of the principal repayment, RBM is required to build up funds in a Sinking Fund Account at six-monthly intervals, beginning the 13th month from the date of issuance. In the event of a shortfall in the account, the holding company is required to cover such shortfall, subject to a limit of RM200 million which shall be stepped down over the tenure of the facility corresponding to the build up of funds in the account. Essentially, bondholders have priority interest over the company’s funds by operation of the payment waterfall established under the issue structure.
RBM’s revenue has been on the rise over the past two fiscal years with revenue reaching RM670 million in FY2002 (FY2001: RM320 million). Its 2002 performance is by far its best. In the intermediate term, RBM’s outstanding order book in excess of RM1.7 billion as at 31 December 2002 is expected to sustain the company’s revenue base for the next 3 years.
Following the issuance of the bonds, RBM’s debt leverage escalated to 2.0 times in FY2002 from 0.4 times in FY2001. This is still below the debt leverage cap of 3.0 times imposed under the issue structure. The gradual build up of funds in the Sinking Fund Account will effectively reduce bondholders’ risk over the tenure of the facility.