MARC continues to maintain Englotechs Holding Bhd’s (Englotechs) BBB-ID  rating in respect of its RM50.0 million Murabahah Medium-Term Notes Programme (MMTN) on MARCWatch Negative where it had been placed on April 1, 2008. The extended MARCWatch Negative reflects continued uncertainty over the Company’s ability to restore its Finance Service Reserve Account (FSRA) balance to the minimum required level and to rectify the breach of its Finance to Net Tangible Assets Ratio (FNR) covenant.

The noteholders are currently considering an extension of the remedy period till Sept 1, 2008 for Englotechs to rectify the covenant breach and replenish the minimum balance required in the FSRA. However, the continued deterioration in the Group’s financial profile and short term liquidity position arising from intense competitive pressures from China’s low-cost cotton glove makers will restrain the Company’s ability to address the breaches by the revised deadline.

Englotechs is involved in the manufacturing and trading of cotton gloves, primarily industrial work gloves for the manufacturing industry. Its manufacturing facilities are located in Padang Meha Industrial Estate, Kedah and Lianyungang, China.

MARC is currently carrying out its annual review of the issuance and will resolve the MARCWatch placement upon completion of the review.