MARC has lifted its MARCWatch Negative placement on Jana Niaga Sdn Bhd’s (JNSB) RM100.0 million Murabahah Underwritten Notes Issuance Facility (MUNIF) and has reaffirmed its MARC-4 ID rating. The rating carries a negative outlook.

JNSB was placed on MARCWatch Negative in February 2007 due to continued cash flow problems stemming from delays in the receipt of UNISEL’s payments of guaranteed rental under a 20-year concession awarded by UNISEL for the construction and operation of a student hostel. This was further compounded by uncertainty over the status of Abrar Discounts Berhad, (Abrar) the sole note holder and underwriter of the MUNIF, and concerns as to JNSB’s ability to successfully refinance the MUNIF in 2007.

UNISEL subsequently settled outstanding guaranteed rental payments amounting to RM9.08 million (for the period from August 2005 to December 2006) in March 2007. In April 2007, UNISEL also paid outstanding maintenance fees amounting to approximately RM0.57 million. However, payments for the first four months of 2007 remain outstanding.

JNSB intends to refinance Tranche 1 of its MUNIF ahead of the maturity date in November 2007. JNSB represented that the company is currently in discussions with a few financial institutions for the proposed refinancing.

MARC will continue to monitor developments with regard to the refinancing of the notes and provide timely rating updates. The rating could be lowered to DID if the notes are not refinanced as expected.