PETALING JAYA: SCOMI GROUP BHD’s subsidiary, Scomi Transit Projects Sdn Bhd (STP), and Prasarana Malaysia Bhd (PMB) have entered into a completion agreement for the design, manufacture, completion and delivery of seven trains for the Kuala Lumpur Monorail for RM122mil.
In a filing with Bursa Malaysia, Scomi said the completion agreement, signed on June 21, was conditional upon the issuance of an acceptance certificate by PMB after the expiry of a monitoring period following the completion of remedial works.
These remedial works are necessary to put five four-car monorail trains into revenue service following the settlement agreement, which is to be fulfilled by May 13, 2020 or such other date mutually agreed by PMB and STP.
Should this not be achieved, the completion agreement would lapse and cease to have further effect.
The works for these seven trains are to be completed within 18 months from the issuance of a notice to proceed by PMB.
Shares in Scomi were suspended from 9.33am to 12.30pm yesterday prior to this announcement. Scomi closed yesterday up two sen to eight sen on a volume of 51.15 million shares.
This completion agreement follows the settlement agreement that was announced on April 4.Back then, a settlement was reached between STP and PMB with the signing of a new contract for RM303mil, ending their dispute relating to the Kuala Lumpur Monorail fleet expansion contract on June 3, 2011.
The project was for the completion of the upgrade of the Kuala Lumpur monorail stations and the electrical and mechanical system, the construction of a new depot and delivery of 12 sets of new four-car trains.
Under the settlement agreement, Scomi said Prasarana would make payments amounting to RM181mil to STP for refurbishment work to repair five sets of four-car monorail trains that have stopped working since January 2018.
Both parties would enter into a further agreement (the completion agreement) for the completion and delivery of seven, four-car monorail trains within 30 days of the condition precedents being met, or any other later date that is mutually agreed upon in writing at an expected cost of RM122mil.
“STP will provide PMB with a design guarantee bond and endemic defects bond, in the form of on-demand bank guarantees each for 2.5% of the completion agreement sum to cover the period of five years commencing from the issue of the System Acceptance Certificate,” Scomi told Bursa Malaysia.
It added that PMB would have the right to step in and perform the works under the completion agreement in the event of a default by STP.
PMB may also retain 2.5% of any payment due to STP under the completion agreement.
Meanwhile, STP will provide PMB with a parent company guarantee issued by Scomi, to guarantee the due performance by STP of its obligations under the completion agreement and indemnify PMB from any losses that it may suffer up to a maximum liability of 5% of the completion agreement sum.
STP will also procure and supply all components, parts, services and materials which are necessary and required for the work under the completion agreement. All the cost will be paid directly to the vendors by PMB from the completion agreement sum.
The completion agreement will not have any material impact on the earnings per share and net assets per share of the company.
It is also not subject to the approval of shareholders of the company or any regulatory authorities.
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