Jetson’s RM1bil contract joy short-lived
Job worth close to RM1bil terminated due to alleged misrepresentation
PETALING JAYA: Kumpulan Jetson Bhd’s joy of winning a construction contract worth almost RM1bil – manifold its market capitalisation – has been short-lived.
Just five days after announcing the massive contract, the company said the job had been unilaterally terminated by the company that had awarded the work.
Jetson, which is disputing the termination, said MCC Overseas (M) Sdn Bhd unilaterally rescinded the contract due to an alleged misrepresentation or non-disclosure of a certain matter in relation to the project.
“A certain matter, namely, that one of the substantial shareholders of the company (Jetson) is a director of a third-party consultant to the employer of the project,” Jetson said in a filing with Bursa Malaysia.
This sent the stock price down to close at 34.5 sen yesterday. It had gone as high as 48.5 sen on June 29, the day that it announced the RM919.32mil contract win.
Jetson, via unit Jetson Construction Sdn Bhd, had won the subcontract job from MCC Overseas, a subsidiary of China-based China Metallurgical Group Corp.
Under the contract, Jetson was to have performed main building works for a mixed commercial project in Jalan Conlay, Kuala Lumpur, which features a five-floor basement, a 10-storey podium, three tower blocks comprising Menara A (61 storeys), Menara B (56 storeys) and Menara C (a 72-storey hotel and strata hotel suites).
The contract sum comprised building works worth RM336.7mil and RM582.7mil for the prime cost and provisional sum.
The job entailed demolition and site works, architectural works to the basement, podium structural works, an elevated car park, retails, Tower B, sky bridges and the facilities floor, external works, and hard landscaping works.
The project, according to Jetson, was expected to contribute positively to the company’s earnings and its subsidiaries for the financial years ending 2017 to 2021.
Jetson, in its filing, denied any such misrepresentation, non-disclosure or wrongdoing that gave rise to such rescission.
Jetson feels that MCC has wrongfully terminated the contract and contends that MCC did not accord it ample time to respond to the matter.
“Jetson believes that MCC has repudiated and wrongfully rescinded the said letter of award. It is seeking legal advice on this matter and will take appropriate action in due course,” it said.
Jetson’s share price has been trending downward since June 30, a day after the contract was announced.
In terms of financial performance, Jetson has been making losses since 2011.
Although Jetson saw a slight turnaround in the first quarter ended March 31, 2017, the company posted a net loss of RM21.81mil on a revenue of RM41.18mil for the fourth quarter ended Dec 31, 2016.
This dragged down its 2016 financial performance, where it delivered a net loss of RM24.57mil on a revenue of RM152.88mil.
Founded on July 26, 1977, the company was listed on the Main Market of Bursa Malaysia in 1994.
It operates in two business segments – construction and property, as well as the manufacturing division.
When contacted, Jetson said it did not wish to comment on the matter at this juncture as advised by its legal adviser.
Jetson’s substantial shareholders are group managing director Datuk Teh Kian An, who holds an 11.8% stake or 23.84 million shares, followed by Next Peak Assets Ltd, which owns a 9.16% interest, and Phoa Boon Ting with 8.97%.
Phoa emerged as a substantial shareholder in Jetson last December when he acquired a 5.43% equity stake in the company.
He is also a director of engineering company Asia Pacific Engineering Consortium Sdn Bhd.
Jetson’s latest win is its second contract win in recent times since it ventured into property development.
On Feb 20, 2017, Jetson announced that it and another Beijing-based company, China Communications Construction Co Ltd, had secured an RM201.87mil subcontract job for the Sungai Besi-Ulu Kelang Elevated Expressway.