Malaysia Rating Corporation Bhd (MARC) has downgraded Scomi Group Bhd's RM500 million medium term notes programme to
BB+ from BBB+.

The rating agency also maintained MARCWatch Negative on the company.

MARC said the rating action affects RM200 million of outstanding notes due on Sept 28.

"The rating downgrade primarily reflects heightened repayment uncertainty as a result of Scomi's delay in addressing the remaining contingencies to the closing of earlier announced equity divestments," it said in a statement.

It said Scomi has yet to fulfil the last remaining conditions precedent to Nigerian-based oil service company, AOS Orwell Ltd's, obligation to close its acquisition of equity stakes in Scomi Nigeria Pte Ltd and Oiltools Africa Ltd.

The rating agency said the setbacks that Scomi had encountered in its initiatives to address its final repayment of the outstanding notes had increased the risk that the group would have inadequate funds to cover its obligations on their due date.

MARC opines that the holding company was currently dependent on favourable conditions to satisfy remaining contingencies to closing the equity divestment and refinancing transactions.

The rating agency said timely receipt and placement of proceeds in its debt service reserve account was also required for Scomi to meet its tight repayment timeline but the company has yet to formulate a specific contingency plan to address further delays to the above mentioned transactions.

MARC will resolve the MARCWatch Negative placement and withdraw its BB+ rating on Scomi's MTN programme once the holding company has completed repayment of the notes.

However, in the event that Scomi fails to make the repayment due on Sept 28, 2012, MARC will lower Scomi's debt rating to D. Bernama