KUALA LUMPUR: Ireka Corporation Bhd
(Ireka) said it is in the process of engaging legal counsel in response to the proposed mutual termination notice from Gammerlite Sdn Bhd (GSB) relating to a sub-contract for a portion of the Pan Borneo Sabah highway project.
The notice was received today from GSB, proposing a mutual termination of the letter of award (LOA) dated Oct 8, 2024 and Oct 11, 2024, where GSB had appointed Ireka’s wholly-owned subsidiary, Shoraka Construction Sdn Bhd (SCSB), for road upgrade works from Kampung Lomou Baru to Kampung Toupus.
The proposal followed the termination of the Project Operation Agreement (POA) between MTD Construction Sdn Bhd (the main contractor) and GSB, which was terminated on June 30, 2025, due to GSB’s failure to secure the required funding by the deadline set out in the POA.
Ireka said it has formally communicated its disagreement to GSB, but to date, it has not received a response.
"ICB does not agree to the proposed mutual termination in its current form, as certain scopes of work under the project have already been partially completed by SCSB; and the mutual termination notice does not address settlement terms for the value of work completed or related obligations,” it said in a stock exchange filing.
In addition, it said in any event, Ireka said it "hereby reserves all its rights, interests, and remedies under the LOA and applicable laws against GSB, including but not limited to recovery for work performed and related costs.”
"The financial impact to the group remains indeterminate at this stage, pending the conclusion of settlement discussions.
"The project’s contract sum was RM1.07 billion, of which approximately RM10 million has been recognised, with RM1 million in profit based on approximately one per cent physical progress,” it added.
Ireka is seeking equitable settlement for work performed and costs incurred, and anticipates legal and administrative expenses in connection with the dispute resolution. - Bernama
