MARC has revised its outlook on the rating of PECD Berhad’s (“PECD”) RM200 million serial fixed rate bonds to negative from developing. The outlook revision follows PECD’s announcement to Bursa Malaysia on 6 July 2007 that its wholly owned subsidiary, Peremba Construction Sdn Bhd (“PCSB”) had been served notices of termination of employment for contracts under its Oceana Development, Palm Jumeirah Project in Dubai, United Arab Emirates. The contract terminations will affect approximately 20% or RM115.6 million of PECD’s outstanding order book. MARC is of the view that this recent development will intensify the Company’s ongoing operating challenges and will undermine prospects for a near-term recovery in credit protection measures.

The ‘BBB-‘ rating on PECD’s bonds continue to reflect its weak operational and financial risk profile even as it seeks to execute a turnaround with the support of its new shareholders. MARC sees increased probability of a downgrade of the bond rating with rising uncertainty as to the timing of meaningful improvement of PECD’s credit profile notwithstanding its impending recapitalization exercise.

PECD is a domestic public-listed construction company, which has since 2004, ventured offshore and secured contracts in Dubai, Sudan and Indonesia. PECD has recently entered into a joint venture with a local party in Dubai to enhance its presence in the Middle East.