MARC has placed CNLT (FAR EAST) Berhad’s (CNLT) RM60 million Bank Guaranteed Commercial Papers/Medium Term Notes ratings of MARC-1(bg)/A(bg) respectively on MARCWatch Negative. The MARCWatch placement follows the announcements by CNLT’s Board of Directors to Bursa Malaysia on 12 September 2007 and 13 September 2007 that Provisional Liquidators have been appointed upon application by a creditor, Vaaibz Pte Ltd to the High Court of Malaya at Seremban. Subsequently, a winding-up petition was served against the Company. The appointment of liquidators constitutes an event of default under the terms of the issuance and will give the noteholders a right to accelerate full repayment on the notes by calling on the Bank Guarantee.

CNLT is a medium sized manufacturer of yarn based in Senawang Industrial Estate, Seremban. Increasing competition and rising operating costs has seen the company’s financial performance deteriorating in recent years. The rapid erosion of its credit profile has weakened the standalone credit rating of the Company. MARC will continue to closely monitor further developments arising from the appointment of the liquidators and the serving of the winding-up petition, and will provide updates as warranted by developments. Notwithstanding, noteholders’ interests are protected by an irrevocable and unconditional Bank Guarantee from Aseambankers Malaysia Bhd, Malayan Banking Berhad, CIMB Bank Berhad and EON Bank Berhad which enhances the standalone rating of CNLT to MARC-1(bg)/A(bg).