MARC has downgraded the rating of Ace Polymers (M) Sdn Bhd (“ACE”) from A- ID to BBB- ID in respect of its RM70 million Al Bai Bithaman Ajil Islamic Debt Securities (“BaIDS”). Concurrently, MARC has also placed ACE’s rating on MARCWatch Negative. Under the BaIDS’ trust deed dated 6 September 2004, ACE is required to make a deposit amounting to RM12.55 million into the Finance Service Reserve Account (“FSRA”) six months prior to the Primary and Secondary BaIDS redemption scheduled on 14 September 2007. However, based on the Facility Agent’s confirmation letter dated 14 August 2007, there was approximately RM4.25 million in the FSRA as of 14 August 2007, which tantamounts to a shortfall of RM8.30 million for the upcoming Primary and Secondary BaIDS redemption due on 14 September 2007. MARC was made to understand that ACE is seeking indulgence from the BaIDSholders for the extension of the BaIDS’ maturity date due on 14 September 2007 to 31 October 2007.

In addition, ACE has also failed to furnish the required semi annual and annual audited accounts for 2007 and 2006 respectively, and confirmation on the Debt Service Cover Ratio as stipulated in the BaIDS’ trust deed.

MARC is closely monitoring ACE’s developments and will disseminate any rating implications arising therefrom accordingly.