KUALA LUMPUR: Malaysian Resources Corp Bhd’s (MRCB) 85% owned indirect subsidiary Rukun Juang Sdn Bhd has signed a supplemental agreement to the RM1.63bil Kuala Lumpur Sports City contract which allows for the extension of Project 1’s completion period beyond 17 months.
In a filing with Bursa Malaysia, the construction and property development firm said the supplemental agreement signed with the Youth and Sports Ministry and Syarikat Tanah dan Harta Sdn Bhd (a company under the Minister of Finance Inc) amended Project 1’s construction period to “the period of construction and completion of the project which shall be within 17 months from the construction commencement date (of) Project 1 or any extended period thereof.”
The supplemental agreement also modified certain deliverables - which MRCB did not elaborate on in the announcement - in relation to the fulfilment of conditions precedent (CPs) and the construction works programme.
Rukun Juang had already received two extensions amounting to about six weeks to fulfill the CPs in the contract to refurbish and upgrade the facilities at the National Sports Complex in Bukit Jalil.
Project 1 -- one of two phases -- involves readying the Bukit Jalil National Stadium for the 2017 South-East Asian Games.
In its announcement to Bursa Malaysia on Oct 28 last year, MRCB said the construction works for Project 1 were expected to span 18 months.
Project 1 was initially supposed to have begun last month and projected to be completed by June 2017.
At an estimated cost of RM499.21mil, the project includes the refurbishing, renovation and upgrading of the National Stadium, Putra Stadium, hockey stadium and aquatic centre located at the National Sports Complex together with the construction of the common infrastructures, including boulevard, parking, steps and new signage.
In consideration of Rukun Juang handing over Project 1 and submitting the land bond to the Government, Syarikat Tanah dan Harta will effect the transfer of a nearby piece of leasehold land in Bukit Jalil measuring 28.13 acres with an agreed value of RM496.27mil to the company within 30 days from the date of the project director’s certificate of opinion that construction works have reached practical completion and have passed any inspection and/or test carried out.
The Government -- a substantial shareholder in MRCB (38.4% owned by the Employees Provident Fund and 10.1% by Lembaga Tabung Haji based on the latest annual report) -- can terminate the privatisation agreement if Rukun Juang, without reasonable cause, fails to start the project’s construction works in accordance with the stipulated terms and conditions.
Among the conditions precedent is getting MRCB’s shareholders approval, which was fulfilled in December.
Other conditions precedent include to submit to the Government’s satisfaction that Rukun Juang has a paid-up capital of no less than RM5mil, neither Rukun Juang nor any of its directors has secured the Government’s approval through illegal means, all information and documents given to the Government are correct, and none of Rukun Juang directors has been an undischarged bankrupt or committed any offence under the Companies Act 1965.
Under the privatisation agreement, the Government may extend the conditions precedent period, provided that such extension does not exceed one month after the expiry period.
If the conditions precedent are not fulfilled within the initial period or any extended period, the privatisation agreement will be null and void and neither party will have any claims against the other.
MRCB shares closed unchanged at RM1.17 on Tuesday, with 627,800 shares changing hands.
* See also MRCB meets conditions precedent in KL Sports City deal
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