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Highlights

Moody's places Dar Al-Arkan on review
 
DIFC - Dubai, August 11, 2010 -- Moody's Investors Service has today
placed on review for potential downgrade the Ba2 ratings for Dar Al-Arkan
Real Estate Development Company, Saudi Joint Stock Company (DAAR), Dar
Al-Arkan International Sukuk Company II (DAAR ISC II) and the US$450
million USD Certificates ("sukuk").
Moody's decision to place the ratings on review follows the company's
reporting of marginally weaker operating performance in the first half
of 2010 as compared to 2009 and higher shareholder remuneration payments
than originally expected by Moody's resulting in some key credit metrics
such as FFO/Debt at 23.5% being below the threshold of 25% originally set
for the rating category while free cash flow for the period was also
negative.
Moody's acknowledges that the company's interest coverage metric at 7.6
times and pre-impairment gross margins of almost 46% are above Moody's
expectations for DAAR's Ba2 rating which will also be taken into account
during the review process.
The review -- which Moody's expects to conclude by the end of October --
will focus on the year-to-date operating performance and how changing
expectations with respect to how the Saudi homebuilding market is likely
to evolve will impact the company's operating performance, investment and
cash flow expectations going forward relative to the guidance we had
originally provided for the rating.
Moody's last rating action on DAAR was implemented on 20 January 2010
when the rating agency assigned provisional (P)Ba2 PD and CF ratings to
DAAR and (P)Ba2 ratings to Dar Al-Arkan International Sukuk Company II
(DAAR ISC II) and the proposed USD Certificates ("sukuk").
The principal methodology used in rating DAAR was Moody's "Global
Homebuilding Industry Rating Methodology", published in March 2009 and
available on
www.moodys.com in the Rating Methodologies sub-directory
under the Research & Ratings tab. Other methodologies and factors that
may have been considered in the process of rating this issuer can also be
found in the Rating Methodologies sub-directory on Moody's website.
DAAR, with headquarters in Riyadh, the capital of the Kingdom of Saudi
Arabia, is among the leading real estate developers and homebuilders.
Established by six Saudi families in 1994, 30% of the company's capital
was floated on the Saudi stock exchange in 2007 and the company had a
market capitalisation of ca. SAR15 billion at the end of 2009. Revenues
in 2009 amounted to almost SAR5.5 billion and the company recorded net
income of SAR2.1 billion.
 
London
David G. Staples
MD - Corporate Finance
Corporate Finance Group
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
 
DIFC - Dubai
Martin Kohlhase
Asst Vice President - Analyst
Corporate Finance Group
Moody's Middle East Ltd.
Telephone: +971-44-01-9536
 
Moody's Middle East Limited
Gate Village 4, Level 3
P.O. Box 113355
DIFC - Dubai
UAE
 
 
 
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   Sat, 04 Sep 2010 18:53:12 GMT