MARC has maintained a MARCWatch with a Negative Outlook on the ratings of Peremba Jaya Holdings Sdn Bhd’s (PJHSB) RM200 million Murabahah Underwritten Notes Issuance Facility (MUNIF)/ Murabahah Medium-Term Notes (MMTNs). The rating action reflects PJHSB’s weak financials as at July 2006 and the continued uncertainty surrounding the finalisation of Contract D with Putrajaya Holdings Sdn Bhd (PjH) which forms one of the sources of repayment of the facility. The long term rating of PJHSB’s facility had in February 2006 been downgraded to A-ID (A minus, Islamic Debt) and the short term rating affirmed at MARC-2ID and placed on MARCWatch with a Negative Outlook. The MARCWatch with a Negative Outlook was further extended in May 2006. The management of PJHSB had indicated that negotiations on the sale of PECD Bhd’s stake in PJHSB to Putrajaya Holdings Sdn Bhd (PjH) was at an advanced stage and the targeted date for the execution of the share sales agreement was the 30th September 2006. However, the agreement has not been signed as at the date of this announcement. Upon the completion of the share sales agreement, PJHSB will become a wholly owned subsidiary of PjH. MARC views the conclusion of the sale as vital in easing PJHSB’s weak financial position.

PJHSB is currently the developer for Precinct 11 (the largest residential zone in Putrajaya), covering an area of 1,056 acres. PJHSB has completed 2,096 residential units to date comprising 104 public units and 1,992 government quarters units under Contract A with PjH. It is currently developing another 1,850 units under Contracts B and C which were expected to be completed in 2005, but are experiencing construction delays. Another 1,427 units of government quarters are to be developed under Contract D, but construction has not commenced as pricing negotiations are still on going. Under the security arrangement, specific assignments of proceeds in respect of the government quarters contracts (for Contracts B, C and D) under Precinct 11 serve as the repayment source for the redemption of the notes issued.

MARC will continue to monitor the developments affecting PJHSB and advise any rating implications in due course.