The rating of BB- accorded to Mycom Berhad’s (“Mycom”) RM60,315,280 nominal value of Redeemable Unsecured Loan Stocks (“RULS”) reflects the risks associated with the implementation of the Group’s restructuring scheme. The rating category reflects significant uncertainties that could affect the ability of the issuer to adequately service debt obligations. The rating carries a stable outlook.

Mycom is an investment holding company with subsidiaries engaged in property development and investment, plantations, manufacturing and plywood. With its core activities concentrated on property development and natural resources, the Group was gravely affected by the 1997/1998 economic slowdown. Arising from this, the Group initiated a Group wide restructuring scheme to rationalize debt and inject new assets with a view towards remaining viable.

The restructuring scheme involves, among others, a capital reduction; recapitalization via a rights and special issue exercise; and a debt restructuring. The debt restructuring exercise involves the issuance of RM60.4 million RULS and other debt instruments as settlement of Mycom’s debt obligations.

Pursuant to the restructuring scheme, Mycom will streamline its business focus to that of property development. In pursuing this strategy, the management has proposed to acquire property based companies from its related company, Olympia Industries Berhad (“OIB”) in order to increase its project portfolio and landbank for future developments. The Group may eventually dispose certain non-core assets under its plantations and plywood businesses in order to supplement its cash coffers.

Mycom’s property developments, Bandar Sri Duta (“BSD”) and the Duta Grand Hotels (“DGH”) projects will be financed from the proceeds of the restructuring scheme. BSD, a proposed mixed development project within the vicinity of Sri Hartamas will be a joint venture (58:42) with OIB; where Mycom will actively carry out the development activities while OIB remains as the passive partner. Mycom’s other development; DGH will comprise condominiums, service apartments and a hotel. Although market risks for both the BSD and DGH projects are somewhat moderated by their strategic locations, the viability of these projects remains uncertain as it hinges on the implementation of the restructuring scheme. Both BSD and DGH projects will commence upon implementation of the restructuring scheme, which is targeted in March 2007.

The Group has recorded consecutive losses since 1998 resulting in negative shareholders funds of RM500.4 million as at FY2006. The Group’s past net cash flow position has been tight, plagued by the continued losses. Its financial flexibility is severely constrained due to the limited availability of unencumbered assets, and its chequered credit history.