KUALA LUMPUR (Nov 19): Malakoff Corp Bhd said today its associate Almiyah Attilemcania SPA (AAS) and subsidiary Tlemcen Desalination Investment Co SAS (TDIC) have received a notice from Sonatrach SPA and L'Algerienne Des Eaux (ADE) to terminate a water purchase agreement inked on Dec 9, 2007.

This is in relation to a sea water desalination plant in Tlemcen, Algeria.

In a filing with Bursa Malaysia, Malakoff said AAS and TDIC had yesterday received the termination notice from the offtakers based on an alleged breach of the agreement due to failure of AAS and TDIC to honour the remediation commitments that were notified by Sonatrach and ADE.

"TDIC will be seeking legal advice and taking the necessary steps to challenge the purported termination by Sonatrach and ADE in accordance with the water purchase agreement," it added.

Algeria-based AAS is responsible for the design, installation and operation of the water desalination plant.

The shareholders of AAS are TDIC and Algerian Energy Co (AEC), holding 51% and 49% of the shares respectively.

The shareholders of TDIC are Malakoff AlDjzair Desal Sdn Bhd, an indirect wholly-owned subsidiary of Malakoff, and Menaspring Utility (S) Pte Ltd, holding 70% and 30% of the stake respectively.

Malakoff Group’s carrying amount of investment in AAS had been fully provided for in 2016. The purported termination is not expected to have any material effect on the group's earnings, net assets and gearing for the financial year ending Dec 31, 2018. 

Malakoff said it will make further announcement(s) as and when there are any material developments in relation to the matter.

Malakoff shares closed unchanged at 87.5 sen today, with 1.96 million shares done, bringing a market capitalisation of RM4.29 billion.