Tuesday, Apr 25, 2006
MARC has placed PSSB Ship Management Sdn Bhd’s (“PSM”) RM40 million Bai’ Bithaman Ajil Islamic Securities (“BAIS”) on MARCWatch with a Negative Outlook, with the likelihood of suspension if the relevant information is not provided within two weeks of this announcement. The RM40 million BAIS was assigned an initial rating of AA-ID in November 2004. The action is due to PSM’s failure, despite numerous requests, to provide substantive information to enable MARC to perform PSM’s BAIS annual review.
PSSB Strategic Holdings Sdn Bhd (“PSSB”), formerly known as Pelangi Shipping Sdn Bhd, as the holding company of PSM, had on 25 September 2000 entered into an agreement with the Government, for the Royal Malaysian Navy to charter a vessel from PSSB for a tenure of ten (10) years (“Charter Agreement”). The Government, in return shall pay PSSB an annual rental payment of RM8.8 million for ten (10) years. PSM is a special purpose vehicle established for the purpose of the BAIS issuance; to accept and manage the rental payments from the Government.
PSSB under the Charter Agreement is responsible for all matters related to the operation, navigation and control of the vessel. The principal terms and conditions of PSM’s BAIS, among others, require PSM upon receipt from PSSB, to deliver its quarterly budget on the operation of the vessel before commencement of each quarter of a financial year to the Trustee. PSM, upon receipt from PSSB, shall also provide the Facility Agent/Trustee a semi-annual actual statement on the operation of the vessel to be reconciled with the yearly operating budget of the Operating Account. The information as at to-date however have yet to be furnished to the relevant parties.
Based on its unaudited accounts for the financial year ended 31 December 2004, PSSB registered a profit before tax of RM3.5 million on the back of RM16.6 million revenue, of which approximately 53% of total revenue was derived from the Government’s rental payments. MARC received confirmation from Malaysian Trustees Berhad that PSM had redeemed RM5.0 million principal together with profit payment in respect of the BAIS in December 2005. As at 12 April 2006, the balance in the Debt Service Reserve Account stood at RM7.93 million, sufficient to meet the principal and profit payments due in June and December 2006.
MARC will monitor the developments affecting PSM and disseminate any rating implications in due course.
PSSB Strategic Holdings Sdn Bhd (“PSSB”), formerly known as Pelangi Shipping Sdn Bhd, as the holding company of PSM, had on 25 September 2000 entered into an agreement with the Government, for the Royal Malaysian Navy to charter a vessel from PSSB for a tenure of ten (10) years (“Charter Agreement”). The Government, in return shall pay PSSB an annual rental payment of RM8.8 million for ten (10) years. PSM is a special purpose vehicle established for the purpose of the BAIS issuance; to accept and manage the rental payments from the Government.
PSSB under the Charter Agreement is responsible for all matters related to the operation, navigation and control of the vessel. The principal terms and conditions of PSM’s BAIS, among others, require PSM upon receipt from PSSB, to deliver its quarterly budget on the operation of the vessel before commencement of each quarter of a financial year to the Trustee. PSM, upon receipt from PSSB, shall also provide the Facility Agent/Trustee a semi-annual actual statement on the operation of the vessel to be reconciled with the yearly operating budget of the Operating Account. The information as at to-date however have yet to be furnished to the relevant parties.
Based on its unaudited accounts for the financial year ended 31 December 2004, PSSB registered a profit before tax of RM3.5 million on the back of RM16.6 million revenue, of which approximately 53% of total revenue was derived from the Government’s rental payments. MARC received confirmation from Malaysian Trustees Berhad that PSM had redeemed RM5.0 million principal together with profit payment in respect of the BAIS in December 2005. As at 12 April 2006, the balance in the Debt Service Reserve Account stood at RM7.93 million, sufficient to meet the principal and profit payments due in June and December 2006.
MARC will monitor the developments affecting PSM and disseminate any rating implications in due course.