On 23 January 2007, MARC placed the following ratings of Intelbest Corporation Sdn Bhd’s (“Intelbest”) on MARCWatch Negative:

RM20.0 million Series 1 BaIDS  BBB+ID
RM35.0 million Series 2 BaIDS  BBBID
RM55.0 million Series 3 BaIDS  BBBID
RM50.0 million MUNIF  MARC-3 ID

The MARCWatch placement was premised on a shortfall in the amount in the Redemption Account (“RA”) prior to the redemption date, and confirmation from the trustee that certain financial covenants had not been complied with. The shortfall in the RA was primarily due to a stop work order issued by authorities on 1 June 2006 following a landslide incident at Ukay Bistari. Meanwhile, Intelbest’s non-compliance of financial covenants was caused by failure to finalise accounts for the financial years ended 2005 and 2006.

The redemption of the Series 1 BaIDS of RM20.0 million and the remaining MUNIF of RM24.0 million were due in February and March 2007 respectively. Based on the announcement dated 28 February 2007, MARC was made to understand, by the issuer and the trustee that the bondholders have agreed to extend the repayment dates for the Primary BaIDS as follows:

RM20.0 million Series 1 BaIDS :  30 September 2009;
RM35.0 million Series 2 BaIDS:  31 March 2010; and
RM55.0 million Series 3 BaIDS:  31 December 2010
 
MARC had on 5 April 2007, received confirmation from Prokhas Sdn Bhd, the appointed company for Abrar Discounts Berhad (“Abrar”) which was formerly the facility agent for Intelbest’s MUNIF and BaIDS issues that RM4.0 million of the RM24.0 million outstanding MUNIF had been redeemed by the issuer on 29 March 2007 using funds in the RA. (MIDF Amanah Investment Bank Berhad has assumed the role of facility agent from Abrar as of March 8, 2007). MARC understands that the Sole Noteholder has agreed to extend the repayment date for the remaining RM20.0 million of the MUNIF to 31 December 2008.
Currently, MARC is awaiting information from Intelbest to complete its annual rating review, and resolve the MARCWatch. Any rating implications arising therefrom will be advised in due course.