MARC has assigned short-term and long-term ratings of MARC-1ID/AAID to Syarikat Pengeluar Air Sungai Selangor Sdn Bhd’s (“SPLASH”) RM435 million Islamic Notes Issuance Master Programme of 20 years tenor, comprising 1) RM50 million Islamic (Murabahah) Commercial Papers (“CPs”) issuance programme (“CP Programme”); and, 2) RM385 million Islamic (Murabahah) Medium Term Notes (“MMTNs”) issuance programme (“MMTNs Programme”). The ratings carry a Stable Outlook.

The ratings are supported by the operation of SPLASH within the low risk water industry, strong offtake agreements and low collection risk on payments from its offtaker Syarikat Bekalan Air Selangor Sdn Bhd (“SYABAS”) and low operations and maintenance (“O&M”) risk, which are expected to bring healthy profits going forward. Nevertheless, the ratings are limited by moderate cashflow protection expected during the tenor of the CPs and MMTNs, as well as a comparatively weak capital structure.

SPLASH is a wholly-owned subsidiary of Syarikat Pengeluar Air Selangor Holdings Bhd (“SPLASH Holdings”). It is a special purpose company formed to undertake the privatization of the O&M of the Phase 1 water treatment facilities at Bukit Badong (“SSP1”), as well as the construction and O&M of Phase 3 of the Sungai Selangor Water Supply Scheme (“SSP3”) for 30 years. Paid-up capital of SPLASH stands at RM400 million as at end March 2006, of which RM50 million is made up of ordinary shares and RM350 million are Redeemable Unsecured Loan Stocks (“RULS”). The shareholders of SPLASH Holdings comprise Gamuda Bhd (40%), The Sweet Water Alliance Sdn Bhd (30%), and Kumpulan Perangsang Selangor Bhd (30%).

With the signing of the Novation Agreement between SPLASH, the Selangor State Government and SYABAS in February 2005, SPLASH receives capacity and supply payments from SYABAS in return for the supply of treated water. SYABAS is the privatized company which has taken over the roles of water distribution and tariff collection from Perbadanan Urus Air Selangor Bhd (“PUAS”) effective 1 January 2005.

Market risk for SPLASH is hedged as 70-80% of revenue is based on Capacity Charges against SYABAS. Capacity Charges are independent of volume of treated water supplied as well as water tariff rates charged to consumers.

MARC’s long-term rating of AAID takes into consideration the issue of the serial MMTNs of up to 10 years amounting to RM385 million to part finance the existing floating rate term loan (“FRTL”). Due to the unavailability of information for the subsequent 10 years, MARC at the moment is not able to rate the MMTNs should it be issued during this period.