KUALA LUMPUR: Shares in Prestariang Bhd fell 11.32% in early trade Tuesday after filing a legal claim of RM732.86mil against the Government over the termination of the National Immigration Control System (SKIN) project.
The counter tumbled 11.32%, or 6 sen to 47 sen. It is the second most actively counter with over 41.9 million shares done.
Prestariang's sub-subsidiary Prestariang Skin Sdn Bhd (PSkin) is suing the Government in light of the latter's termination of the SKIN project.
According to Prestariang, the concession agreement clearly spells out the government's obligations in the event the project is terminated by way of expropriation.
PSkin had secured the 15-year concession on Aug 9, 2017, to design and manage a new immigration and border control system for the Immigration Department to replace the older system.
The claim of RM732.86mil is calculated based on the contractual formula provided in the concession agreement which had been agreed to by the government, said Prestariang.
In addition to the RM732.86mil, Pskin is also claiming interest on the sum at a rate of 5% per annum from the date of the judgment, and costs.
CIMB Research said the latest news was negative as it suggests negotiations between both parties have broken down.
“This news is a negative surprise to us as we previously expected both parties to come to an agreement on the compensation for Prestariang’s loss of the SKIN concession project,” CIMB said.
It added that the RM732.8mil compensation that PSkin was seeking is much higher than its RM520mil estimate, i.e.the net present value (NPV) of the availability charges (similar to power purchase agreements).
“However, we do not have the finer details of the CA. At RM732.8m, compensation to Prestariang (Prestariang owns a 70% stake in PSkin) isRM513mil or RM1.06 per Prestariang share. This would be 46 sen above its current share price,” it said.
“Prestariang remains a reduce. The legal case with the government could be a long-drawn affair, in our view,” CIMB said.