Ikhmas Jaya to be compensated
MD says termination of contract for Met 1 project is mutually agreed upon
THE KL Metropolis, a 75.5 acres mixed-development project by Naza TTDI, may see a potential Chinese contractor taking part in its construction and financing, according to a source.
“Naza TTDI is working with a potential contractor from China for the construction of the entire project and this includes financing of the project as well,” the source says.
The project is said to have an estimated gross development value (GDV) of RM20bil, located at a sweet spot in the upmarket of prime residential and commercial centres such as Mont Kiara, Publika, Damansara Heights and Bangsar in Kuala Lumpur.
The potential Chinese partner surfaced after one of the contractors for a development within the project saw its contract terminated.
The action has raised many eyebrows, especially since the work was already 81% completed.
Ikhmas Jaya has announced in a filing with Bursa Malaysia that it had received a letter from TTDI KL Metropolis, a unit of Naza TTDI, terminating a contract for earthworks, piling and substructure for a project in the KL Metropolis.
The company said the earthworks are for a 59-storey residential tower, two blocks of office towers and two retail malls with a gross development value of RM1.3bil.
The said project is known as Met 1, part of the larger KL Metropolis development that is currently undertaken by Naza TTDI.
Overall, the development of the KL Metropolis is divided into precincts: Met 1 to Met 9, spanning over 15 years.
Naza TTDI has roped in three-joint venture partners namely Hap Seng Land Development Sdn Bhd, Triterra Metropolis Sdn Bhd, and Nusmetro Sdn Bhd to develop part of the KL Metropolis.
In an email reply to StarBizWeek , Naza TTDI Sdn Bhd senior project director Khoo Thian Shyang says the termination of the piling work was due to a delay in the project progress and at the same time, the contract has expired.
“To preserve the best interest of our stakeholders, we have to terminate the contract and to have the main contractor take over the remaining works,” he said.
Despite the termination of the piling job, Khoo says the Met 1 development will continue and the residential portion is expected to be completed in 2021.
Meanwhile, Ikhmas Jaya group managing director Datuk Ang Cheng Siong says the firm will be compensated and paid accordingly in “equitable, fair and justifiable manner as per the terms and conditions of the contract or letter of award.”
The event saw a knee-jerk reaction on Ikhmas Jaya, which fell 4% to 12.5 sen before recovering 8% to 13.5 sen yesterday.
The total contract, which was clinched in November 2016, is valued at RM57.8mil with the balance of work to be carried out worth RM11mil.
In an announcement back in 2016, it said that the piling work is expected to be completed in July 2017.
When asked about the reasons for the contract termination, Ang says it is a “mutual termination”.
He says the firm has one project with TTDI KL Metropolis.
Currently, he points out, Ikhmas Jaya is sitting on an order book of RM800mil, which will last the company for two to three years.
“The company is cautiously optimistic given its track record and expertise in infra jobs such as roads, bridges, water supply, piling and foundation works,” he says.
Ikhmas Jaya shares have fallen more than 76% in the last one year.
For the third quarter ended Sept 30, 2018, Ikhmas Jaya went into the red posting losses of RM4mil from RM11.3mil a year ago due a provision for impairment charge it made on contract assets and trade receivables amounting to RM9.9mil.
Revenue for the quarter was higher at RM67.1mil compared with RM60.6mil previously thanks to a number of construction jobs.
Ang: The company is cautiously optimistic given its track record and expertise in infra jobs.