On January 8, 2001, Puncak Niaga Holdings Berhad (“Puncak Niaga” or “The Company”) made an announcement that its wholly owned subsidiary, Puncak Niaga (M) Sdn Bhd (PNSB), had on December 29, 2000 issued a letter to terminate the turnkey construction contract for the Sungai Selangor Phase 2 Stage 2 (SSP2 Stage 2) water treatment plant. The contractor, Seni Kembara-Hazama-Central Energy-OTV consortium had been terminated on the grounds that it had failed to comply fully with the contractual requirements of the contract. Notwithstanding the termination of the contract, the SSP2 Stage 2 project was certified as satisfactorily commissioned and practically completed on December 21, 2000 by the Consultant Engineer. PNSB has since commenced operation and management of the project facilities on January 1, 2001 in accordance with the Construction Cum Concession Agreement (CCOA) dated 25 March 1995.

The termination of the contract is not expected to have any material effect on the timing of project cash flows. Consequently, the ratings of PNSB’s Al-Bai Bithaman Ajil bonds and the Murabahah Commercial Papers/Murabahah Medium Term Notes remain unchanged at AAID and MARC-1ID/AAID respectively. MARC will continue to monitor developments arising from the termination of the turnkey contract and disseminate subsequent rating implications, if any.