Friday, Jan 27, 2006
MARC has downgraded the rating of Perspektif Perkasa Sdn Bhd’s (PPSB) RM188 million Murabahah Underwritten Notes Issuance Facility (MUNIF) from MARC-3ID to MARC-4ID and concurrently placed the rating on a MARCWatch with a Negative Outlook. PPSB is the developer of Bandar Pinggiran Cyber, an 800-acre township to be located at the fringe of Cyberjaya.
The rating downgrade and Negative Outlook follows halted progress of the property development at Bandar Pinggiran Cyber, which forms the main source of repayment for the MUNIF. This consequently affected the developer’s cash flow, causing them to miss their first sinking fund payment of RM25 million scheduled in July of 2005. Furthermore, we opine that due to PPSB’s weak financial capacity, the developer is unlikely to resume works on Bandar Pinggiran Cyber. We understand that the developer has initiated a restructuring scheme to address this matter. A progress report from the Independent Quantity Surveyor has indicated that for one of the phases, Phase 3D1, only 27.4% of the development works have been completed against a scheduled progress rate of 63.4%, resulting in a delay of 98 days.
It was purported by the developer that development works on Bandar Pinggiran Cyber were affected by labour shortages and acute shortage in certain building materials. This had an adverse impact on PPSB’s anticipated progress billings which in turn resulted in weaker than anticipated cash flow coverages. Arising from this, PPSB missed the first scheduled sinking fund payment of RM25 million due on 24 July 2005.
In our discussion with the management of PPSB, we were informed that they are currently in discussions with interested buyers to dispose some lands held for development. We have been further informed that proceeds from the disposal will then be utilised to regularize the sinking fund payments. MARC will continue to monitor the developments with regards to this proposed scheme and as the outcome becomes clearer, will disseminate any subsequent rating implications, if any, in due course.
The rating downgrade and Negative Outlook follows halted progress of the property development at Bandar Pinggiran Cyber, which forms the main source of repayment for the MUNIF. This consequently affected the developer’s cash flow, causing them to miss their first sinking fund payment of RM25 million scheduled in July of 2005. Furthermore, we opine that due to PPSB’s weak financial capacity, the developer is unlikely to resume works on Bandar Pinggiran Cyber. We understand that the developer has initiated a restructuring scheme to address this matter. A progress report from the Independent Quantity Surveyor has indicated that for one of the phases, Phase 3D1, only 27.4% of the development works have been completed against a scheduled progress rate of 63.4%, resulting in a delay of 98 days.
It was purported by the developer that development works on Bandar Pinggiran Cyber were affected by labour shortages and acute shortage in certain building materials. This had an adverse impact on PPSB’s anticipated progress billings which in turn resulted in weaker than anticipated cash flow coverages. Arising from this, PPSB missed the first scheduled sinking fund payment of RM25 million due on 24 July 2005.
In our discussion with the management of PPSB, we were informed that they are currently in discussions with interested buyers to dispose some lands held for development. We have been further informed that proceeds from the disposal will then be utilised to regularize the sinking fund payments. MARC will continue to monitor the developments with regards to this proposed scheme and as the outcome becomes clearer, will disseminate any subsequent rating implications, if any, in due course.