MARC has lifted the MARCWatch placed on the rating of Aliran Ihsan Resources Berhad’s (AIRB) RM56.9 million Redeemable Convertible Unsecured Loan Stocks (RCULS), whilst maintaining a Developing Outlook. The lifting of the MARCWatch is due to developments with regards to the discussions between AIRB and the Johor State Government (JSG) concerning the proposed restructuring of the water supply services industry in the state of Johor. It is now highly likely that the restructuring of the water supply services industry in Johor state will not entail the purchase of all existing water assets from the current concessionaires.

In December 2005, MARC had placed AIRB’s RM56.9 million RCULS rating of A (A flat) on a MARCWatch with a Developing Outlook, based on a proposal by the JSG to restructure the water supply services industry (“the Proposal”) in Johor via the purchase of all existing water assets from current concessionaires, including assets owned by AIRB. This would have resulted in AIRB losing its concessions and thereby raising questions about the company’s future business and credit profile.

Based on MARC’s latest discussions with AIRB, the company has indicated that it is now in discussions with the JSG with regards to the Proposal. Even though no concrete outcome has resulted from the discussions, the JSG apparently has presented several options to AIRB which may reduce the possibility of JSG purchasing the assets of the water treatment plant players.

The lifting of the MARCWatch placement reflects the expectations that there will not be any significant evolution of the company’s business profile in the near term. Nevertheless, considering the ongoing discussion, MARC shall maintain the Developing Outlook on the rating.