MARC has assigned ratings of AA- IS and MARC-1 ID to Alam Maritim Resources Berhad’s (AMRB or the Company) RM500 million Sukuk Ijarah MTN Facility and RM100 million Murabahah Commercial Papers/ Medium-Term Notes Facility (MCP/MMTN). The ratings carry a stable outlook.

The ratings reflect AMRB’s strong business position, favourable growth prospects, healthy financial condition as well as sinking fund provisions under the issue structure. AMRB will deposit and maintain a sinking fund on a quarterly basis for the Islamic Securities. Moderating factors, however, include long receivable collection period in respect of some debtors which results in high investments in working capital and lower liquidity, and the Company’s moderate capitalisation and asset base.

AMRB has been involved in offshore services provider using own vessels or third party vessels since 1998 via its subsidiary, Alam Maritim (M) Sdn Bhd (AMSB) (previously known as Majestic Line Sdn Bhd). (Over the years, the Company has established itself as a provider of offshore support vessels services as well as underwater support services.) AMRB has also ventured into related businesses such as underwater services for the oil and gas industry and the construction of offshore facilities. AMRB was listed on the Main Board of Bursa Malaysia on 20 July 2006 and is currently expanding its fleet from 15 vessels now to 22 by the end of 2007 and to 24 by the middle of 2008.

Demand for offshore support vessels and underwater support services is expected to remain strong in the near to intermediate term in line with the positive outlook for exploration and production (E&P) activities. PETRONAS intends to increase production by 3% per annum over the next five years. It is estimated that about 13 to 14 additional oil and gas platforms need to be built every year for the next five years, with the total number of platforms increasing to between 318 and 323. As such, the number of vessels needed to service the new platforms coming onstream is expected to increase.

AMRB’s revenue was RM151.16 million for FY2006. Financials have also improved at the subsidiary level (AMSB), with total revenue increasing to RM188.95 million in FY2006 from RM100.37 in FY2003 representing a compounded annual growth rate (CAGR) of 23.5% per annum, largely due to increase in revenue for its offshore support vessel services. Revenue contribution from underwater services, however, is still low at 14.4% of revenue in FY2006, which is significantly higher compared to only 0.1% in FY2003. The group’s gross profit margin has been trending upwards averaging 30.7% for the past four years. As at 31 March 2007, AMRB recorded revenue of RM61.87 million and profit after tax of RM15.87 million.

CFO has remained positive in the past 4 years, however, cash flows declined slightly for the current year due to slower collection of receivables. With the delivery of the new vessels, revenue is expected to increase which will result in improvements in CFO and coverage.

AMSB’s gearing as measured by total debt to shareholder’s fund plus minority interests averaged 1.94 times for the last four years. Debt leverage for the AMRB Group improved to 1.70 times as at FY2006, mainly as a consequence of the group’s listing exercise in FY2006 which resulted in an enlarged capital base of RM174.17 million. On a consolidated basis, borrowings rose from RM187.78 million in FY2005 to RM296.58 million as at FY2006. However, in light of the Company’s recent announcement of a proposed private placement, MARC anticipates a decline in the Company’s gearing ratio with the increase in shareholder’s fund. Debt leverage gearing ratio upon the completion of the private placement is expected to be 1.06 times.

The stable outlook reflects expectations that continuing favourable trend in the oil and gas industry will support revenue expansion whilst more manageable capital needs will allow AMRB to maintain increasingly sound coverage levels going forward.