RM785 million (rated at AA3), Junior Sukuk Istina’ of up to RM633 million (rated at A1), RM240 million Redeemable Convertible Unsecured Loan Stocks Programme (rated at B3) and RM50 million Redeemable Unsecured Loan Stocks (rated at B3) on rating watch with a negative outlook.
The rating watch is premised on the cessation of construction works on the Kajang-Seremban Highway in the Taman Bukit Margosa area, and potentially lower traffic plying the highway as a result of the delay in completion of the Taman Bukit Margosa area, RAM said in a statement on 30th of Dec, 2009.
On 12th of Nov, 2009, LEKAS was directed to stop construction works of the highway in the Taman Bukit Margosa area, where the Seremban High Court allowed the application of an injunction order to stop work by residents of Taman Bukit Margosa against LEKAS and 11 others.
On Dec 10, 2009, the hearing for the defendants’ application to strike out the civil suit which includes compensation claims of RM112 million by the plaintiffs was deferred to March 1, 2010.
LEKAS has thus been unable to resume construction of the highway in the Taman Bukit Margosa area.
In the meantime, LEKAS is in the midst of applying for a stay on the injunction order while the next hearing date remains to be fixed.
“We highlight that there will be downward rating pressure if LEKAS is unable to complete and open the highway to the public by mid-June 2010, which will result in loss of tolling revenue, or if the company is found to be liable for compensation to the plaintiffs,” RAM said.
The rating agency said it will continue to monitor the traffic volume of the highway.
“We have highlighted that it is imperative for the traffic volume to reach 65,000 average daily traffic during the first full year of operations, with long-haul commuters who travel from Seremban to Kuala Lumpur city or vice versa making up at least 50 per cent of the total traffic volume,” it said.
“There will be downward rating pressure if the traffic volume build-up is slower than expected,” it added.
source : bernama