WCT says it has good grounds to ‘defend and oppose’ RM214 mil claims

KUALA LUMPUR (July 13): WCT Holdings Bhd has reached a preliminary view that, subject to formal legal opinion, it has good grounds to defend and oppose three companies’ claims for 181.57 million riyals (RM214.12 million) over payment for a government project in Doha, Qatar, where it was the main contractor.

The claimants — Trans Gulf International Electro-Mechanical WLL, Powermech Engineering WLL and Trans Gulf International Electro-Mechanical WLL-Powermech Engineering WLL joint venture — were WCT’s subcontractors for mechanical, electrical and plumbing-related works for the project.

“The financial impact on the group is not expected to be material as [WCT] believes it has good grounds to defend and oppose the claims, and there should be no impact on the group’s operations as the project has been completed and handed over to, and occupied by, the client,” said WCT in a filing with Bursa Malaysia yesterday.

In a separate statement, Malaysian Rating Corp Bhd (MARC) said the request for arbitration against WCT has no immediate rating impact on the group’s RM1 billion medium term note (MTN) programme and RM1.5 billion sukuk programme. The ratings remain at AA- and AA-IS respectively, with a negative outlook.

MARC, however, is of the view that the resolution of arbitration cases generally requires a significant amount of time.

As such, the rating agency will continue to monitor the arbitration proceedings to evaluate their impact on WCT’s financials.

“A negative rating action on the MTN and sukuk is unlikely in the near term unless subsequent developments as a result of the arbitration proceedings lead MARC to believe that the outcome will have a material negative effect on WCT’s credit quality,” it said.

WCT shares closed up three sen or 1.54% at RM1.98 yesterday, for a market capitalisation of RM2.79 billion.

This article first appeared in The Edge Financial Daily, on July 13, 2017.

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