MARC has placed Jana Niaga Sdn Bhd’s (“JNSB”) RM100.0 million Murabahah Underwritten Notes Issuance Facility (“MUNIF”) on MARCWatch with developing implications. The MUNIF had been downgraded earlier in May 2006 from MARC-2ID to MARC-3ID following JNSB’s deteriorating cash flow position arising from the failure of University Industri Selangor (“UNISEL”) to meet guaranteed rental payments. JNSB has been in discussion with UNISEL to settle the outstanding rental payments, which have since ballooned to RM8.7 million as at October 2006. In the latest development,  JNSB has received written confirmation from UNISEL that all outstanding rentals will be paid by 31 January 2007.

Failure on the part of UNISEL to meet the shortfall by the appointed date will lead to an immediate downgrade of JNSB’s current rating, as this would exacerbate the company’s already weak cash flow and raise serious doubts on its ability to undertake a planned refinancing of the facility when it matures in November 2007.

MARC will continue to monitor developments affecting JNSB and disseminate any subsequent rating implications, if any, in due course.