ميدان .. أرابتك .. Wct الماليزيه

General Announcement
Reference No WW-090106-60362

Company Name : WCT BERHAD
Stock Name : WCT
Date Announced : 06/01/2009

Type : Announcement
Subject : NAD AL SHEBA DUBAI RACECOURSE CONTRACT

Contents : Cancellation of Contract

Reference is made to the Company’s earlier announcement today pertaining to the cancellation of the Contract relating to the construction and completion of the main building works, external works and infrastructure works (“Contract”) of the Nad Al-Sheba Racecourse Project (“the Project”) by Meydan L.L.C. (“Employer”).

Background

The Contract was awarded by the Employer to the 50:50 joint venture between the Company and Arabtec Construction L.L.C. (“JV”) for a contract sum of approximately AED4.6 billion (approximately RM4.6 billion) with an original construction period of 754 days (approximately 25 months) and an original contractual Date for Completion of 7th October 2009.

Notice of Cancellation

On 29th December 2008, the Company was informed that the JV had received a notice dated 25th December 2008 from the Employer giving 14 days’ notice to cancel the Contract (“the Cancellation”). The Employer attributed the Cancellation to “non-adherence to the agreed time schedule for construction” which is strongly disputed by the JV.

Concerted efforts have been made by the Directors and the JV since receiving the notice to meet with the Employer with regards to the Cancellation.

Status

As of to-date, the JV has completed approximately 55% of the physical portion of the Works. Of the balance remaining Works, approximately 40% were works to be undertaken by Nominated Sub-Contractors and approximately 5% were works to be undertaken directly by the JV. WCT’s share of the potential loss of order book is approximately AED1.35 billion (RM1.29 billion).

Financial & Operational Impact

Subsequent to the Cancellation, the Employer called on the performance bond and advance payment bond provided by the JV, which call the JV is contesting. Should the JV fail in its contestation of the payment of bonds, the estimated net cash flow impact to the Company will be about RM178 million. The Company is of the opinion that it is able to fulfill its commitments with the issuing bank.

The above payment, when made, will result in the net gearing ratio of the Group to increase slightly to 0.57 times (currently 0.42 times). The Board is of the view that this payment on the bonds is recoverable from the Employer.

Other then the above, the Board is of the opinion that the Cancellation has no other significant financial and operational impact to the Group.

The Board views the Cancellation as a breach of contract on the part of the Employer. The Company, through the JV, is currently considering all its options and will take the necessary steps to protect the Group’s interests.

This announcement is dated 6 January 2009.

Announcement Details :