MARC has removed EP Manufacturing Bhd’s (EPMB) ratings of MARC-2ID /AID in respect of its RM150 million Murabahah Notes Issuance Facility (MUNIF)/Islamic Medium Term Notes (IMTN) and RM120 million MUNIF/IMTN from MARCWatch Negative, where they had been placed since July 19, 2007.

EPMB manufactures and supplies automotive products to both the original and replacement markets. It is a tier-one supplier to national carmakers, PROTON Holdings Bhd (PROTON) and Perusahaan Otomobil Kedua Sdn Bhd (PERODUA).

The MARCWatch removal reflects EPMB’s improving business environment and operating performance, which should enable it to gradually restore its financial profile to an extent that is consistent with its current rating.

On October 3, 2007, EPMB secured approval from its shareholders for the RM38.5 million acquisition of Circle Ring Network Sdn Bhd (CRN), the manufacturer of patented electronic water meters for the UK-based Severn Trent Metering Services Ltd (STMS). CRN also holds exclusive rights to sell and distribute the electronic water meter in Southeast Asia, Taiwan, Australia, New Zealand, Japan and China. Profit contributions from CRN for the first three years of the post-acquisition period are supported by a profit guarantee amounting to RM24.0 million provided by the vendors of CRN. Additionally, EPMB’s financial performance in the second half of 2007 is expected to improve based on the encouraging orders reported to date for the newly launched PROTON Persona and continuing strong sales of PERODUA Myvi and Viva vehicles.

MARC is in the midst of undertaking the annual rating review for EPMB’s MUNIF/IMTN and expects to affirm the current debt ratings within the next few weeks upon completion of our review process.