MARC said today that its A+ID and MARC-1ID ratings on Sunrise Berhad’s (“Sunrise”) long and short term Islamic debt ratings are not affected by the cancellation of the underwriting commitment for the Murabahah Notes Issuance Facility/Islamic Medium Term Notes Facility (“MUNIF/IMTN”) and the disposal of Plaza Mont’ Kiara with respect to the following MARC-rated issuances:

• RM100 million Bai’ Bithaman Ajil Notes Issuance Facility (“BBA NIF”),
• MUNIF/IMTN of up to RM70 million, and
• Islamic Commercial Paper Issuance Programme (“CP”) and Islamic Medium Term Notes Issuance Programme (“IMTN”) of up to RM150 million.

On June 18, 2007, Sunrise informed MARC of its intention to initiate a cancellation of all underwriting commitments under its MUNIF. Abrar Discount Berhad (“Abrar”) and MIDF Amanah Investment Bank Berhad (“MIDF”) had earlier, on June 8, 2007 and June 14, 2007, respectively, terminated their underwriting commitments in relation to the MUNIF. Abrar’s termination of its underwriting commitment follows its cessation of operations as a discount house. The termination of all underwriting commitments under the MUNIF is conditional upon consent from the noteholders and the regulatory authorities. Subsequently, on June 22, 2007, Sunrise announced that it had, on June 8, 2007, entered into a conditional sale and purchase agreement (“SPA”) with Mayban Trustees Berhad (“purchaser or REIT Trustee”), which is acting for and on behalf of Quill Capital Trust, to dispose Plaza Mont’Kiara, a retail property, for a consideration of RM90.0 million.

MARC is of the view that the ratings will not be affected by the termination of the MUNIF’s underwriting arrangements. To date, the company has not encountered any difficulties in its attempts to replace maturing notes with new notes on roll over dates, and on this basis, Sunrise believes that the underwriting arrangements may be dispensed with. MARC believes that, notwithstanding the function of underwriting arrangements in backstopping and mitigating rollover risk associated with short-term maturities, Sunrise will be able to finance maturing note obligations under the MUNIF without interruption, given the company’s strong credit quality, financial flexibility, and own-source liquidity that stands behind the MUNIF issuance.

MARC expects that, upon completion of Sunrise’s disposal of Plaza Mont’Kiara, the balance sheet structure and liquidity of Sunrise will be improved on the assumption that sale proceeds will be used for working capital. The proposed disposal marks the first stage in a sale and leaseback transaction with Quill Capital Trust, in which the property will be sold at its current market value and leased back to Sunrise for a seven-year tenure at an average net annual rental of approximately RM7.1 million as opposed to current net annual rental of approximately RM5.0 million. The asset sale is not expected to materially alter the business and financial risk profile of Sunrise which presently has a moderate leverage position as represented by a debt-to-equity ratio of 0.47 times (based on 3QFY2007). A full annual review of the bonds issue will be carried out in October 2007.