MARC has removed its MARCWatch Negative ratings on Evermaster Group Berhad’s (“EGB”) RM50.0 million Al-Bai Bithaman Ajil Islamic Debt Securities (“BaIDS”) and RM40.0 million Murabahah Multi-Option Notes Issuance Facility (“MONIF”) where they had been placed on July 13, 2007 and downgraded its long-term and short-term ratings on the BaIDS and MONIF from A-ID to BBB+ID and MARC-2 ID to MARC-3 ID, respectively. The ratings carry a negative outlook. The downgrades reflect the deterioration in EGB’s financial risk profile as well as heightened concerns about its cash generation ability and liquidity position. The negative outlook reflects the company’s dependence on the success of debt refinancing initiatives and/or shareholder advances to address its near-term debt maturities. The ratings could be lowered again if insufficient progress is made in the next two months, with respect to its immediate liquidity requirements. Meanwhile, EGB is continuing its efforts to secure new bank borrowings to refinance its BaIDS.

EGB’s first principal redemption of RM15.0 million on the BaIDS is due on December 30, 2008, of which half or RM7.5 million has to be deposited into the sinking fund account by June 2008, and the balance, by September 2008.

EGB is principally involved in the manufacturing and trading of processed wood products, primarily plywood and moulded timber products. The Group’s timber and timber related division contributed about 93.4% to total revenues in FY2007 whilst the balance was derived from construction activities. EGB does not own any timber concession but secures its supply of logs from log suppliers by making advance payments to the latter. EGB’s financial flexibility continues to be limited, reflected by its small unencumbered cash balances.