KUALA LUMPUR, Jan 5 (Bernama) -- Malaysian Rating Corporation Bhd (MARC) has affirmed its long-term rating on Assar Chemicals Sdn Bhd (ACSB)`s RM150 million serial sukuk musyarakah at AAAIS.
The outlook on the rating is maintained at stable, said the rating agency in a statement on Tuesday.
MARC said the significant transfers of cash to ACSB`s related companies in the past two financial years has predisposed ACSB to a higher liquidity risk and reduced headroom with respect to its finance service cover ratio (FSCR) covenants.
However, the rating continued to be supported by stable revenue generation of ACSB supported by the long-term agreement with high credit standing terminal users, namely Petronas Dagangan Bhd (PDB) and Shell Timur Sdn Bhd (STSB), and prompt collection of monthly payments from the two terminal users, which formed the source of ACSB`s debt servicing, it said.
ACSB is 100 per cent-owned by Assar Senari Sdn Bhd, which is linked to the Sarawak state government through a 20 per cent ownership by Yayasan Sarawak and was incorporated to undertake the construction of an independent oil terminal (IOT).
ACSB signed a musyarakah contract with the sukukholders for the purpose of constructing and leasing the IOT, which is located in Senari, Kuching.
The sukuk trustee holds a beneficial interest in the IOT on behalf of the sukukholders.
The terminal started operations in January 2007, and serves as a centralised storage facility for bulk petroleum products and liquefied petroleum gas, said MARC.
ACSB`s related company IOT Management Sdn Bhd, in which PDB and STSB have direct shareholding of 20 per cent and 10 per cent respectively, was appointed to manage, operate and maintain the oil terminal for a 30-year period, it said.
ACSB`s revenue of RM24.9 million in financial year 2008 was derived from IOT tariff collections which were 6.0 per cent lower than the previous year.
Administrative and operating expenses were 10.7 per cent higher, resulting in a lower pre-tax profit of RM6.8 million compared to RM8.8 million previously.
Nevertheless, operating profit margin in financil year 2008 remained high at 62.3 per cent, MARC said.
ACSB`s financial results for the first nine months of 2009 produced a pre-tax profit of RM5.3 million and revenue of RM19.4 million, it said.
Meanwhile, ACSB`s balance sheet continued to improve with lower debt from the scheduled redemption of the sukuk coupled with an increase in retained earnings, MARC said.
The debt-to-equity ratio stood at 2.6 times as at year-end 2008 and continued to decline to 2.1 times as at September 2009, below the covenanted limit of 4.0 times, it said.
-- BERNAMA
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