MARC continues to maintain its AID /MARC-2ID  ratings on Emas Kiara Industries Bhd’s (EKIB) RM80 million Partially Underwritten Murabahah Notes Issuance Facility / Islamic Medium Term Notes Issuance Facility (MUNIF/IMTN) on MARCWatch Developing where they were placed since December 10, 2007. The rating action follows slower than anticipated progress on EKIB’s acquisition of a 51% stake in Carimin Sdn Bhd (CSB). EKIB has extended the timeline for submission to the authorities in respect of the proposed acquisition for a further three months commencing February 26, 2008. EKIB is currently conducting due diligence for the proposed acquisition.

EKIB had on 27 November 2007 entered into a conditional sale and purchase agreement to acquire 51% in CSB for about RM25.5 million by issuance of 51,000,000 new ordinary shares of RM0.50 each at an issue price of RM0.50 per share to CSB’s vendors.

CSB is principally involved in manpower supply, structural fabrication and construction work in the oil, gas and petrochemical industry while EKIB is the leading geosynthetic manufacturer in Malaysia with an estimated 60% market share. The company produces a wide range of geosynthetics products and has markets in Australia, South East Asia, the Middle East and Africa.
 
EKIB recorded an improved top line performance based on unaudited results for FYE2007 reporting revenue of RM102.9 million, 64% higher as compared to FY2006. The Company returned a net profit of RM4.2 million, after reporting losses of RM9.2 million in FY2006. CSB which recorded RM90.5 million of revenue and a net profit of RM7.4 million for the financial year ended 30 June 2007 is expected to sustain its performance in FY2008 based on its existing order book of RM280 million.

MARC maintains its view that the acquisition if completed will facilitate improved earnings diversity for EKIB and positively impact EKIB’s credit profile. MARC will monitor the progress of the proposed acquisition and resolve the MARCWatch placement once the transaction closes.