MRT Corp terminated the contract given to TRC Synergy’s unit for renovation and conservation works on two blocks at Sultan Abdul Samad Building on the basis of “national interest.”
KUALA LUMPUR: TRC Synergy Bhd said its late announcement to Bursa Malaysia on the loss of a RM74.4mil contract from Mass Rapid Transit Corp Sdn Bhd (MRT Corp) was due to a misunderstanding by its management on the termination.
This was because the reason for the termination was not due to default in contract by its unit Trans Resources Corp Sdn Bhd but rather due to a prerogative right of MRT Corp as stipulated in the contract, it said.
Furthermore, under the contract secured in March, TRC would also be entitled to compensation due to the termination, the company said in a filing with Bursa Malaysia.
TRC received the notice of termination from MRT Corp’s project delivery partner, MMC Gamuda KVMRT (PDP SSP) Sdn Bhd, on May 20. However, the announcement to the bourse was filed only on Monday.
“The management of the company was also of the opinion that the contract value of the project amounting to RM74mil is not too significant against the company’s group total contract book order of RM2.6bil. Therefore, the termination would not have a material impact on the earnings per share and net asset value of the company,” TRC said.
The company’s board of directors, in its meeting on Monday, however agreed to announce on the termination after due deliberation and consideration.
TRC reiterated that the termination was made pursuant to Clause 62 of the condition of contract by the owner, MRT Corp.
“Clause 62 talks about the termination of contract on national interest whereby the Government may terminate the contract by giving not less than 30 days written notice to the contractor without any obligation to give any reason thereof if the Government considers that such termination is necessary for national interest, national policy or national security,” it explained.
“For the purpose of the above provision, what constitutes national interest, national policy and national security shall be solely made and determined by the Government and such determination shall be final and conclusive and shall not be open to any challenge whatsoever.”
TRC has initiated a series of negotiations and discussions with MRT Corp’s project delivery partner (PDP) to ascertain the quantum of damages and cost incurred and other consequences to the termination.
“Due diligence exercise had also been undertaken by the owner’s PDP in relation thereto pursuant to the contract documents,” it added.
TRC Synergy shares shed 2 sen to close at 39.5 sen on Tuesday with 949,000 shares changing hands.
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