MARC has placed its MARC-2ID/AID ratings on Emas Kiara Industries Berhad's (EKIB) RM80 million Partially Underwritten Murabahah Notes Issuance Facility/Islamic Medium Term Notes Issuance Facility (MUNIF/IMTN) on MARCWatch Developing. The MARCWatch placement follows EKIB's proposed divestment of its geosynthetic manufacturing business to Tencate Geosynthetics Asia Sdn Bhd,a subsidiary of Netherland-based Royal Ten Cate N.V. EKIB expects to realise cash proceeds of RM100.0 million which it plans to use to repay its bank loans and the RM50.0 million outstanding under the rated facilities. The transaction is expected to be completed by early 2011, subject to the approval of EKIB's shareholders and relevant authorities amongst other things.

The MARCWatch reflects the possibility that the transaction may not proceed as expected and the uncertainties that it will generate with respect to the operating profile and earnings generation ability of EKIB following the disposal of its core operating business. At the same time, MARC draws comfort from the liquidity that will be generated from the sale of EKIB's geosynthetic manufacturing business and the company's plan to retire its existing debts, including the rated facilities. EKIB expects to repay the rated facilities in full within 12 months from the completion of the disposal.

The final redemption of RM10 million of IMTNs is scheduled in August 2011 while the RM40 million outstanding under the MUNIF is due in December 2012.

MARC will seek to resolve the MARCWatch in line with the expected completion of the disposal in early 2011.

Contacts: 
Janey Chock 03-2082 2264 / janey@marc.com.my;
Rajan Paramesran 03-2082 2233 / rajan@marc.com.my.