MARC downgrades Oilcorp's RM70m Islamic debt (ext: BT)

MALAYSIAN Rating Corp Bhd (MARC) has downgraded Oilcorp Bhd's RM70 million Islamic debt to "BB" from "A-" due to concerns that it may not be able to settle the debt.

Oilcorp, which is involved in oil and gas engineering, property development and deep sea fishing, has failed to deposit RM10 million into an account on September 7 to repay part of the debt due on October 7.

It needs to pay back RM20 million on that day, MARC said in a statement.

MARC said Oilcorp has no other sources of potential liquidity apart from outstanding receivables that it may rely on to meet the upcoming obligation.

Nonetheless, Oilcorp has got a time extension to make the sinking fund payment from its sole bondholder.

Oilcorp made an unaudited loss before tax of RM0.5 million for the first half of 2009 on the back of falling revenue.

Net cashflow from operating activities during the period was negative RM20.7 million.

MARC could downgrade the debt further if Oilcorp could not find other sources of repayment closer to the October redemption deadline.