AWC’s plans to diversify into rail-related works hit snag

KUALA LUMPUR (June 6): AWC Bhd said it will proceed with the completion of its proposed acquisition of a 60% stake in Trackwork & Supplies Sdn Bhd for RM43.5 million only after Trackwork has resolved a RM19 million claim dispute.

In March, AWC unveiled plans to diversify its engineering services business to include rail-related works via the acquisition of the stake in Trackwork.

In a filing with Bursa Malaysia yesterday, AWC said Trackwork and one of its international principals have, however, received a demand letter from a customer claiming that some of the machines supplied by them are defective and is therefore seeking RM19 million in claims comprising, inter alia, liquidated agreed damages, cost of rental and expenses for replacement machines.

“The company (AWC) is currently assessing the implications of this claim with regard to the proposals and will seek further information from the sellers, to determine the next course of action,” it added.

AWC said its board of directors had decided to only proceed with the completion of the proposals when the sellers and Trackwork are able to settle the claim without any material negative impact on the financial performance of Trackwork.

“In this regard, and if necessary, the company will seek to include the settlement or resolution of this claim to the company’s satisfaction as a condition precedent to the share sale agreement (SSA) vide a supplemental SSA. For the avoidance of doubt, the company will not assume any liability arising from this development,” it added.

“The company will also make the necessary announcements on the progress of this matter as and when there is further development,” said AWC.

Trading of AWC shares was suspended yesterday pending the release of the material announcement.

This article first appeared in The Edge Financial Daily, on June 6, 2018.

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