KUALA LUMPUR (May 4): SKH Consortium Bhd announced today it is pulling out as the managing contractor for a Terengganu development for which it was appointed in 2015, to mitigate business and financial risks it was exposed to.

SKH originally secured the RM192 million job, which marked its first foray into the property construction business, via its wholly-owned unit Super Kian Holdings Sdn Bhd after signing a managing contractor agreement (MCA) with Total Merit Sdn Bhd.

Pursuant to the agreement, Super Kian took on Total Merit's project on a land measuring 12.14 ha in Kemaman, Terengganu, where it was responsible for providing professional project management facilities for the development comprising six blocks of apartments, shop lots and amenities.

However, SKH disclosed today to the stock exchange that both parties have "mutually agreed to terminate the MCA" by signing a deed of mutual termination today, due to current economic condition.

"Total Merit foresees that there will be a further delay in the development of the land due to the current economic condition, which implies that the re-commencement of the managing contractor work by Super Kian will be further extended.

"The board understands that the potential benefits expected to be derived from the MCA could not be materialised during the original intended timeframe, and foresees that it could be prolonged to a longer time period," the filing read.

SKH said the termination is in the best interest of the group, as it will mitigate the business and financial risks it could potentially be exposed to.

In addition, the earnest payment of RM12 million as performance bond which could be recovered within 90 days would be allocated to the group's existing business, it added.

SKH is principally in the information technology business, and has aimed to diversify its income stream by venturing into the property construction industry.

According to its latest annual report, besides Kemaman, the group is involved in construction works in Batu Pahat, Johor, and USJ, Subang.

Shares in SKH closed 0.5 sen or 6.67% down to seven sen today, with a market capitalisation of RM42.69 million. — theedgemarkets.com

For more stories, download EdgeProp.my pullout here for free.

SHARE
RELATED POSTS
  1. Varia bags RM572m Socso rehabilitation centre project in Terengganu
  2. Fairfield by Marriott opens new hotel in Terengganu
  3. BCB buys 286-acre land in Batu Pahat for RM83.71 mil