KUCHING: SCIB Properties Sdn Bhd (SCIBP) has ceased to be the main contractor for the Malaysia civil servants housing programme (PPAM) project in Perak as developer Awana JV Suria Saga Sdn Bhd has failed to fulfil the condition precedent under a settlement cum appointment of contractor agreement (SA) signed between them last year.
The condition precedent required the appointment of a person nominated by SCIBP into Awana’s board of directors within the conditional period.
According to SCIBP’s parent, Sarawak Consolidated Industries Bhd (SCIB), Awana had refused to comply with the condition precedent despite numerous reminders and demand made.
SCIBP was awarded the project with a contract value of RM162 million and appointed the exclusive main contractor on July 25, 2024 via the deal that allows Awana an opportunity to repay an outstanding debt of about RM19.72 million to SCIBP.
“Awana did not fulfil the required condition precedent within the stipulated time under the SA (dated April 15,2024) and the contract. Consequently, SCIBP had, among others, notified Awana of the lapse of the SA and the contract via a letter dated 3 January 2024 (the notice) which are now of no effect due to the non-compliance and request for a proposal from Awana (on) how they intend to settle the indebtedness due and owing to SCIBP by 10 January 2025.
“On 6 January 2025, Awana conceded that the SA and the contract are no longer enforceable but they did not address the issues raised in the notice. SCIBP had not received any further responses from Awana,” SCIB said in a filing with Bursa Malaysia.
The project involves the construction of both affordable housing and commercial units in two phases on 48.56 hectares of land in Mualim, Perak.
Phase 1A will consist of 346 units of single-storey affordable terrace houses (Type B) and 28 units of two-storey shop offices.
Phase 1B will have 456 units of double-storey affordable terrace houses (Type A).
SCIBP and Awana mutually agreed to terminate the contract and signed a settlement agreement on July 6, 2023.
The agreement confirmed the obligation for the full and final settlement of debts and established the terms and payment schedule for the amount owing by Awana to SCIBP.
SCIBP had prior and subsequent to its appointment as a contractor for the project advanced various sums of money to and/or on behalf of Awana totalling some RM18.72 million.
Awana had agreed to repay the debts in 24 installments, with the first installment payment of RM75,000 made on August 21,2023.
As the contract had lapsed, SCIB said there is no basis for the company to continue as the corporate guarantor in favour of MBSB Bank Bhd and Awana is required to do all necessary to cause SCIB to be discharged as the corporate guarantor.
“Subject to the removal of SCIB as corporate guarantor, SCIBP’s representatives shall be discharged as co-signatories of all Awana’s MBSB bank accounts,” it added.
SCIB said it is taking the necessary measures to protect its interests in mitigating the risks arising from the lapse of the SA and contract, and the long-overdue debts owing by the clients (Awana) or the slow/non-movement of project progress.
“The company is seeking legal advice in relation to the recovery of the outstanding amount owed by Awana and the discharge of the corporate guarantor with MBSB.
“As a result of the SA and contract having lapsed and no longer enforceable, the amount due and owing amounted to RM19,716,067.67 by the developer will be subject to impairment review. If the amount owing is fully impaired, it will affect the net assets of SCIB group for the financial year ending 30 June 2025.
“However, after discussions with our lawyer and a preliminary assessment of Awana’s financial position, management believe that there is a strong possibility of recovering the amount owed by Awana,” it added.
SCIB said it would provide status update on the settlement in a separate announcement.
