by NUR HANANI AZMAN / pic by TMR FILE

SARAWAK Consolidated Industries Bhd (SCIB) has mutually agreed with clients and subcontractors to terminate contracts of six projects located in Oman and Qatar to alleviate risks from long-overdue debts owed by SCIB clients.

The civil engineering specialist said in a bourse filing that it had signed the respective settlement agreements with Pavilion Qatar Engineering Co WLL, Revenue International LLC, Interceptor Trading & Contracting WLL and Skyview Trading & Contracting WLL in the two countries to mutually terminate the contracts previously awarded to SCIB and its wholly-owned subsidiary company SCIB International (Labuan) Ltd between Oct 25, 2019, and Dec 3, 2020.

“The company is enforcing its rights under the contracts and taking the necessary measures to protect SCIB’s interests in mitigating the risks arising from the long-overdue debts owing by the clients and the uncertainties surrounding the Covid-19 pandemic.

“Additionally, this decision was made as a result of repositioning of business strategy in overseas projects,” said SCIB.

The total amount owed by the clients stood at US$148.71 million (RM617.15 million), while the total amount owed to the subcontractors stood at US$135.15 million, said SCIB.

“The final claims stated in the settlement agreements are consistent with the provisions that were taken up in the accounts,” it added, while highlighting that the termination of contracts would not have any material effect on the gearing, earnings per share and net assets of SCIB for the financial year ending June 30, 2022.

Trading of the shares in SCIB has been suspended since Tuesday after the group failed to submit its annual report.

In a separate statement, SCIB group MD and CEO Rosland Othman said the projects affected by the termination are six villas in Qatar first announced in October 2019, nine villas in Oman first announced in October 2019, 18 five-storey buildings in Qatar first announced in April 2020, two service centres in Qatar first announced in April 2020, civil works for a fire water project in Qatar first announced in December 2020 and 20 villas in Oman first announced in April 2020.

“We decided on the termination after discussions and reviewing the commercial viability of the projects in light of the Covid-19 situation that has made it difficult to meet project schedules. We also have problems securing financing for projects given the current market conditions.

“While there will be some impact, the decision taken to terminate the contracts is in the long-term best interests of the company and its shareholders. The termination of the contracts comes with a final settlement and there is no further penalty or punitive damages imposed on SCIB from clients and subcontractors,” he said.

He stressed that SCIB’s other projects continue as scheduled and the group is looking for opportunities in Malaysia and Asean where they are focusing on basic public infrastructure needs.

“There is also the added advantage of being better able to control costs and a cheaper workforce while we can leverage on our strengths as the largest precast concrete and Industrialised Building System (IBS) manufacturer in East Malaysia.

“Our IBS offerings and adoption of 3D technology will also give us a competitive edge as projects become more efficient and can be completed in shorter periods with quality building material. We will continue to deal with the challenges of the more volatile operating landscape by ensuring that costs are managed well and take other prudent measures to ensure business continuity and sustainability,” he said.