A RM2bil ‘deal crash’ on Pan Borneo Highway

JV partner Samling claims agreement with Ekovest is now void

PETALING JAYA: Lebuhraya Borneo Utara Sdn Bhd – the project delivery partner of the Pan Borneo Highway – has not given consent to the joint-venture (JV) company formed between Ekovest Bhd and Samling Group to undertake sub-contraction work valued at some RM2.11bil for the highway.

In a filing with Bursa Malaysia, Ekovest said that it had received a letter from its JV partner, Samling Resources Sdn Bhd (SRSB), with regards to this matter.

“As such, SRSB is claiming that the JV company cannot carry out the project and that the JV and shareholders’ agreement is now void.

“We are reserving our rights in relation to the above matter and are seeking advice and will take all necessary action as may be required,” said Ekovest.

Nonetheless, Ekovest said that this is not expected to have any material effect on the operations and financials of the Ekovest group.

Further announcements will be made on this matter, if required, it added.

In January 2017, Ekovest first announced that it was to participate in the construction of the Pan Borneo Highway by entering into a JV with Miri-based Samling Group to develop a 95.4-km Sarawak stretch under a RM2.11bil contract.

Back then, Ekovest said that its unit – Ekovest Construction Sdn Bhd – had inked a JV and shareholders’ agreement with SRSB to jointly develop and upgrade the stretch from Semantan to Sg Moyan Bridge, plus the Kuching-Serian roundabout interchanges.

Ekovest said a JV company, SamlingEkovest JV Sdn Bhd, would be incorporated as the vehicle for the parties to undertake the implementation of the project.

Ekovest Construction would hold a 30% stake in the JV company, while SRSB would own the rest. Based on this, Ekovest’s share of the contract value was RM633.8mil.

The stretch initally given to the JV of Ekovest and Samling was reported to be the longest of the 11 stretches for the Sarawak portion of the toll-free highway under phase one.

The work package was one of two Pan Borneo Highway packages clinched by SRSB in 2016.

Ekovest closed 1.5 sen higher to 62 sen on a volume of 17.8 million shares.

Meanwhile, Ekovest’s third-quarter results to March 31 saw a 68.23% jump in net profit to RM18.6mil on the back of a 24.42% lower revenue of RM220.52mil.

The better profits were due to better margins in the property-development segment.

For the nine-month period, net profit was up 23.05% to RM113.44mil, while revenue was 2.76% lower at RM749.03mil.

Looking ahead, Ekovest expects the ongoing construction of the Setiawangsa-Pantai Expressway, River of Life and related projects, the opening of the DUKE Phase-2’s toll revenue and the recognition of unbilled sales from property-development activities to contribute positively to the group’s turnover and profitability in the current financial year.

“Barring any unforeseen circumstances, the board is confident that the group’s performance would remain satisfactory for the financial year ending June 30, 2018,” it added.