MARC has received confirmation from the facility agent that MK Land Holdings Berhad (MK Land) had on August 29, 2008 redeemed the principal payment of bonds amounting to RM60 million as scheduled. The BBB+ rating on MK Land’s bonds remains under review for possible downgrade based on its continuing weak earnings and cash flow arising from the low take-up rates for its ongoing property development projects. 

As for the remaining outstanding bonds,  for which a scheduled principal payment of RM60 million is due on June 13, 2009, MARC expects MK Land to be reliant on debt refinancing or asset disposals to meet its obligations in light of its deteriorating internal free cash flow generation. Based on its unaudited results for financial year ending June 30, 2008 (FY2008), MK Land’s financial performance continues to deteriorate as reflected by a 43.8% plunge in revenue to RM135.8 million. In the same period, it suffered a pre-tax loss of RM63 million from a pre-tax profit of RM17.4 million registered in FY2007. Its immediate liquidity position is further strained due to a deficit net cash flow recorded in the same period.

MARC expects to resolve the MARCWatch upon the completion of a full review of MK Land’s rating. 

Contacts:
Khairul Muzamel Perera 03-2090 2247/ kevinkhairul@marc.com.my;
Elea Nor Zainal, 03-2090 2263/ elea@marc.com.my.