MARC has lowered its rating on Malaysian Newsprint Industries Sdn Bhd’s (MNI) RM923 million Bai’ Bi Al-Taqsit Fixed Rate Serial Bonds Programme from A-(s)ID to BBB+(s)ID. The rating action reflects the impact of the decline in newsprint prices on the company’s financials. Global newsprint prices have fallen to a new historical low due to the economic slowdown and oversupply problem in North America. Hence, MARC does not expect MNI’s profitability and cashflow measures to be maintained at levels supportive of a rating in the ‘A’ category. Nonetheless, the revised rating continues to be supported by the company’s competitive position as the sole newsprint producer in Malaysia; secured offtake commitments from Malaysian sponsors; its low operational risk; and liquidity support in the form of RM108 million standby credit facilities.

MNI, the only local producer of newsprint, commenced operation in April 1999. The company’s newsprint is produced from recycled old newspaper and old magazines. Its mill is located in an industrial park at Mentakab, Pahang. The major shareholders of MNI are Hong Leong Industries Berhad (33.65%), Norske Skog Industrier (33.65%) and The New Straits Times Press (21.36%). A Norwegian based company, Norske Skog Industrier is one of the largest newsprint producers in the world.