Bangkok--21 Jun--Fitch Ratings Fitch Ratings has today assigned a National Long-term rating of ‘A-(tha)’ (A minus (tha)) to Thailand-based MBK Public Company Limited’s (MBK) up to THB3.0 billion senior unsecured debentures No. 1/2007, due 2010. The proceeds from the debentures will be used for business expansion. The ratings are based on MBK’s strong market position in the shopping plaza and hotel businesses in Bangkok, the relatively strong and stable cashflow generated from the MBK Center, as well as the expected earnings growth from new investments. The MBK Center’s key competitive advantages are its prime location, established brand, strong traffic flows, diversified tenant base and varied target-customer profiles, all of which have helped generate stable cashflow streams (accounting for around two-thirds of the group’s EBITDAR); at the same time, these factors have offset the impact of intensifying competition in the shopping plaza business. Over the past three years, MBK’s consolidated EBITDAR has stayed in the range of THB1.3 billion to THB1.5bn. The ratings also take into account MBK’s relatively strong financial position, with net debt to last-twelve-month EBITDAR ratio of 2.0x at end-9M07, compared to 2.1x at FYE06 (ending June 2006), and 3.0x at FYE05. Despite its high level of short term debt (78% of total debt portfolio at end-9M07), MBK’s liquidity should remain manageable, supported by its cash on hand of THB176 million at end-March 2007, its strong and stable cashflows generated from the core businesses, as well as access to the local debt capital market. In May 2007, MBK’s board of directors agreed on a 20-year lease extension with Chulalongkorn University (CU), a lessor of the MBK Center project (comprising the MBK Center, MBK Tower and Pathumwan Princess Hotel), once the existing lease expires in 2013. The new rental term is divided into an upfront payment worth THB2.6bn to be paid within 18 months after the contract is signed, and a sum of THB22.8bn of annual installments from 2013 to 2032. Apart from this, MBK is subject to pay 5% revenue sharing to CU, on top of its annual rental fee, on the portion of revenue from the project that exceeds CU’s estimation; also, MBK has to set a budget of THB1.2bn for the renovation of the project by 2018. The up to THB3.0bn debentures will largely be used to fund the upfront payment, while the annual rental fee will be met by the company’s internal cash flow. MBK’s lease renewal will result in a temporary increase in net debt to EBITDAR beyond the mid-cycle range of 3.0x, although this has already been factored into the current ratings. MBK’s key credit risks include its exposure to economic cycles and travel shocks in the shopping plaza and hotel business, as well as its high level of non-core investments, particularly the equity investment in its finance affiliate, Thanachart Capital Public Company Limited. Note to Editors: Fitch’s National ratings provide a relative measure of creditworthiness for rated entities in countries with relatively low international sovereign ratings and where there is demand for such ratings. The best risk within a country is rated ‘AAA’ and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as ‘AAA(tha)’ for National ratings in Thailand. Specific letter grades are not therefore internationally comparable. Contacts: Soamsiri Chadavadh/Wasant Polcharoen/Vincent Milton, Bangkok, Tel: +662 655 4755. Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com . Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.