MARC has lowered its rating on Sistem Lingkaran-Lebuhraya Kajang Sdn Bhd’s (SILK) Notional Amount of RM2.10 billion Al-Bai Bithaman Ajil Islamic Debt Issuance Facility (ABBA) from ‘B- ID’ to ‘D’. Concurrently, the rating has been removed from MARCWatch Negative where it had been initially placed in May 2007. The lowered rating reflects SILK’s inability to meet the August 22, 2007 scheduled redemption of RM150 million due on the facility. The rating also acknowledges MARC’s understanding that the financial covenant breached in February 2007 in respect of SILK’s annual debt service cover ratio (DSCR) remains unresolved.

The bondholders had approved the restructuring of the ABBA in accordance with the restructuring proposal by Affin Investment Bank Berhad at an Extraordinary General Meeting (EGM) convened on August 17, 2007. Subject to appropriate resolutions being passed by SILK and Sunway Holdings Incorporated Berhad in relation to the restructuring, the trustee has been irrevocably instructed not to take any enforcement action against SILK for any breach of covenant under the facility from the date of the extraordinary resolution up to November 30, 2007.

Following the downgrade, MARC has withdrawn the rating and no longer has any rating obligations to the ABBA issue.