Spring Gallery bags RM75m managing contractor job for Kemaman apartment

KUALA LUMPUR (July 9): Spring Gallery Bhd, via its wholly owned subsidiary Profit Sunland Sdn Bhd, has secured a managing contractor agreement estimated to be worth RM75 million from JV Muhibbah Sdn Bhd for the development of Southern City Phase 1B, an 18-storey apartment located at Jalan Jakar, Kemaman, Terengganu.

Under the agreement, Profit Sunland will be the project’s managing contractor for 24 months, with another 18 months of defect liability period, Spring Gallery’s filing to Bursa Malaysia today showed.

Spring Gallery said the contract is estimated to be valued at RM75 million, after considering the scope of work, which includes administration, management, consulting, reporting, and coordination of construction and sales of the development project, and cost of wages.

“The board, after taking into consideration the estimated costs as well as the expectation of a reasonable gross profit margin for the development project, is agreeable to the contract value.

“Spring Gallery intends to finance the development project via internally generated funds and/or bank borrowings. The exact mix of funds will be determined by the management of Spring Gallery at a later date,” it said.

However, it said that should the project be funded with bank borrowings, fluctuations in interest rates will increase the cost of borrowings.

“In such an event, Spring Gallery will monitor closely the fluctuations in interest rate and will negotiate with the relevant financial institution for an attractive and cost effective financing package,” it said.

The group added that its move to diversify into the construction business is in the best interest of Spring Gallery.

The project is expected to be completed within 24 months from the date of commencement, which has yet to be fixed.

Spring Gallery closed 3.85% or 2.5 sen higher at 67.5 sen per share, giving it a market capitalisation of RM67.93 million.