MARC said today that its ratings in relation to the following Issuances are not affected by Jebel Ali Free Zone International’s (JAFZI) withdrawal from the operation and management of the Port Klang Free Zone (PKFZ):

• Special Port Vehicle Bhd - RM1,310.0 million nominal amount asset-backed serial bonds;
• Transhipment Megahub Bhd - RM1,095.0 million bonds and up to RM360.0 million of Commercial Papers/Medium Term Notes (CP/MTN);
• Valid Ventures Bhd - RM510.0 million fixed rate serial bonds (bonds) and up to RM85.0 million of CP/MTN; and
• Free Zone Capital Bhd - RM410.0 million fixed-rate serial bonds and up to RM70.0 million CP/MTN.
  

JAFZI announced on 18 July 2007 that it had given formal notice of termination of the PKFZ concession on the same day. MARC is of the opinion that this should not have an impact on the ratings of the Issuances. MARC’s ratings primarily reflect PKA’s reliance on government support to discharge its obligations under the rated issuances as opposed to PKA’s intrinsic credit strength. PKA’s obligations under all the Issuances are backed by letters of support from the Ministry of Transport (MOT), which attest to PKA’s status as a statutory authority under the purview of MOT and economic significance of PKFZ. MARC is of the view that the letters of support create a strong moral obligation on the part of MOT to support PKA and its obligations under the Issuances. The ratings on the Issuances are further supported by the protective issue structure and timely completion of development works thus far. PKA had previously signed a consultancy agreement and management contract with JAFZI, the consulting and management division of Jebel Ali Free Zone Authority, to assist PKA in the administration, marketing and sales on both technical and operational levels.

Nevertheless, it is imperative for PKA to identify a replacement for JAFZI in order to ensure the strategic importance of PKFZ and to avoid the possibility of any disruption in operations of PKFZ. MARC has been made to understand that PKA has appointed two former Northpoint (Malaysia) Bhd senior executives to undertake marketing and business development functions at PKFZ.

To date, PKA has fulfilled its payment obligations to Special Port Vehicle Bhd and Transhipment Megahub Bhd of RM130.0 million and RM230.0 million respectively, in June 2007. The payment by PKA to Valid Ventures Bhd of RM150.0 million is due on 31 July 2007.