MARC has affirmed its BBB+ rating on MK Land Holdings Bhd’s (MK Land) RM60.0 million outstanding bonds. At the same time, the rating was removed from MARCWatch Negative, where they had been placed since May 7, 2008 due to liquidity concerns following the deferment of scheduled payments to build up its sinking fund account (SFA). Concurrently, MARC has assigned a stable outlook to the rating.

The rating action follows the full placement of RM60 million into the SFA as at to date. The bonds are due to be redeemed on September 14, 2009 and under the issue structure, MK Land is required to fund the SFA fully by June 13, 2009. MK Land had earlier redeemed the final payment of Tranche 1 Bonds amounting to RM60 million as scheduled. 

For the nine months ending March 31, 2009 (9MFY2009), MK Land’s revenue improved significantly by 88.9% to RM224.4 million (9MFY2008: RM118.8 million) and recorded a pre-tax profit of RM21.7 million, against a loss of RM11.7 million in 9MFY2008. The improved performance is attributed largely to higher sales of development properties. Although its cash flow from operations was a positive RM23.9 million for the nine-month period, its liquidity position remained strained. Its cash and bank balances and deposits with licensed banks were RM42.3 million compared to short-term borrowings of RM297.9 million which includes the outstanding bonds and RM124.0 million of bank overdrafts.

MARC will withdraw its issue rating upon the final redemption of the outstanding bonds in September 2009.

Contacts:
Elea Nor Zainal, 03-2090 2263/ elea@marc.com.my;
Katherine Hee Cheui May, 03-2090 2273/ hcmay@marc.com.my