MARC has placed the AID rating of Englotechs Holding Bhd’s (Englotechs) RM50.0 million Murabahah Medium Term Notes Programme (MMTN) on MARCWatch Negative. The MARCWatch placement reflects MARC’s concerns about the significant deterioration in Englotechs’ working capital and liquidity following a rapid increase in its trade receivables. Unless cash flow from operations improve, the likely effect would be sustained cash flow deficits and a continued weakening of Englotechs’ credit quality. Its finance to net tangible assets ratio has risen and as at March 2007 is close to the covenanted cap, severely restricting the company’s financial flexibility and capacity to seek alternate sources of working capital.

Englotechs has failed, despite numerous requests, to provide satisfactory information for MARC to complete its second annual surveillance review. MARC will resolve the MARCWatch placement upon completion of its rating review, which is expected to be completed within the next four weeks.