MARC has revised the MARCWatch status on the MARC-2/A ratings of Axis Incorporation Berhad’s (Axis) RM100.0 million Commercial Papers / Medium-Term Notes Programme (CP/MTN) upon completion of its annual review, from Negative to Developing. The revision in MARCWatch status reflects an anticipated refinancing of the CP/MTN facility with bank borrowings by end 2007. The Company is at an advanced stage of the refinancing exercise, having obtained approval for the facilities from the relevant bank. If the refinancing of the CP/MTN is completed as proposed, the MARCWatch placement will be resolved and the ratings will be withdrawn upon the redemption of the facility. The ratings were first placed on MARCWatch Negative on 3 October 2007 following a breach in Axis’ gearing covenant.

Axis is involved in the garment and textile industry, with businesses in the knitting and dyeing of fabrics, garment manufacturing and the trading of yarn and fabrics. The Group’s knit and dye operations are based in Johor while their OEM (original equipment manufacturing) garment contract manufacturing segment has operations in Vietnam and Cambodia. Axis’s trading arm is based in Singapore.

On 3 October 2007, Axis sought maximum indulgence from noteholders following its breach of the covenanted debt to equity ratio of 1.50 times. Bondholders’ indulgence was granted to Axis on 1 November 2007 on the condition that the CP/MTN Facility will be fully settled by 31 December 2007.  


November 27, 2007