KUALA LUMPUR: Zelan Bhd will finally get to complete the 950.03 million dirham (RM839.07 million) Meena Plaza, a mixed-use development project in Abu Dhabi in the United Arab Emirates, after settling a dispute with the project owner Meena Holdings LLC that started two years ago.
Under the second supplementary agreement signed yesterday between Zelan — via its wholly-owned unit Zelan Holdings (M) Sdn Bhd — and Meena Holdings, both parties agreed to resume work on the project in accordance with the original contract dated April 1, 2008 as if the contract had never been terminated.
Both Zelan and Meena Holdings also agreed to raise the project’s original contract price of 950.03 million dirham to 980.05 million dirham as a result of an agreed variation order for additional fit out work of 30.02 million dirham.
As such, the value of the remaining works to be undertaken by Zelan is now 515.49 million dirham instead of 464.56 million dirham as at November 2012.
In a filing with Bursa Malaysia yesterday, Zelan said Meena Holdings had agreed to pay 121.64 million dirham to Zelan within 74 days from the date of the agreement.
The payment consists of a refund of 92.5 million dirham which was paid to Meena Holdings earlier, pursuant to its demand on Zelan’s performance bond in November 2012, and outstanding progress claims for works done amounting to 29.11 million dirham due to Zelan.
In exchange for the payment to Zelan, it will provide Meena Holdings with a new performance bond of 51.55 million dirham, equivalent to 10% of the balance contract price, which is valid for 15 months.
This includes an extension of 12 months for the defects liability period, and a rectification bond of 40.98 million dirham, which is valid for 6.5 months, as performance security for the basement’s rectification works of 15 million dirham to be carried out by Zelan.
“Zelan will recommence work on the project 30 days after the payment date, and the completion period for the remaining works is 15 months from the recommencement date,” the company said.
In November 2012, Zelan received a letter from Meena Holdings, giving it 14 days’ notice to terminate the contract for Package 2 of the Meena Plaza construction and to liquidate the performance bond totalling 92.5 million dirham.
This was subsequently challenged by Zelan, which had described the termination notice as baseless and wrongful in view of the application for an extension of time submitted by Zelan prior to the notice, which had yet to be assessed and determined in accordance with the provisions of the contract.
This article first appeared in The Edge Financial Daily, on April 16, 2014.
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