Vivocom’s subsidiary terminates RM240mil contract

KUALA LUMPUR: Vivocom Intl Holdings Bhd’s subsidiary Vivocom Enterprise Sdn Bhd (VESB) has decided to terminate a RM240.42mil construction contract awarded to it last year by Coneff Corp Sdn Bhd.

This comes just days after Vivocom announced problems with another construction job - Gateway Klang - where the group has halted work although it had not received an official letter of termination from main contractor China Railway Construction Corp that gave it the subcontract.

In a filing with Bursa Malaysia, Vivocom said VESB, its 78.6% owned indirect subsidiary, on Friday sent a termination notice to Coneff due to non-fulfilments of “certain contractual obligations”, which it did not elaborate on.

“The board of directors is of the opinion that the non-fulfilments of the contractual obligations had made it difficult for VESB to complete the project and hence it is in the best interest of the group to terminate the contract,” it said.

To recap, VESB received the letter of award from Coneff on Jan 20, 2016, to build two blocks of commercial towers in Sungai Besi, Kuala Lumpur.

The towers in Desa Tasik would comprise service apartments, two storeys of retail units, one storey of recreational centre and seven storeys of car parks.

Coneff, a 70%-own indirect subsidiary of Zamurni Sdn Bhd, was formed to undertake developments projects, namely the joint-development Desa Tasik project, with the Kuala Lumpur City Hall.

The job awarded to VESB was originally expected to start in March 2016 and be completed within 45 months.

Vivocom said the termination of the contract was not expected to materially affect the group’s earnings and net assets as it had concurrent ongoing projects.

It is also confident of netting more new projects in the foreseeable future, as the group has “a rich pipeline of several sizable projects” currently under bid.

The Vivocom group is involved in construction, telecommunication engineering and service provision, and aluminium door and window fabrication.
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