This article first appeared in The Edge Financial Daily on December 11, 2018

KUALA LUMPUR: Prestariang Bhd, whose shares tumbled by as much as 35% to an intraday low of 30 sen yesterday on news of the cancellation of the national immigration control system (SKIN) concession, said it had not received any notice of default from the government about the concession agreement.

“Prestariang’s board of directors wishes to clarify that as at the date of this announcement, Prestariang SKIN Sdn Bhd is not in default of the concession agreement and has not received any notice of default from the government of Malaysia.

“In relation thereto, Prestariang SKIN will seek clarification from the government on this matter and will make the necessary announcement once there is any update concerning the above,” Prestariang said in a filing with Bursa Malaysia yesterday.

The RM3.5 billion project, regarded as a jewel in the company’s crown, was supposedly a new border control system facilitating the movement of people in and out of Malaysia, replacing the existing Malaysia Immigration System (myIMMs) in use for more than two decades.

Yesterday, Home Minister Tan Sri Muhyiddin Yassin was reported as saying the cabinet had agreed that the SKIN project be cancelled and replaced with a more comprehensive new system that is user-friendly and of more monetary value to save government funds.

“The new system, which may be known as myIMMs Global, was proposed as among the efforts to increase the Immigration Department’s service capacity, besides replacing other patch-on systems used by the department currently.

“We expect this new system to be able to fully replace myIMMs in at least two years from now,” Muhyiddin reportedly said, adding that the existing system would be used as per usual until that time.

Nevertheless, Prestariang’s clarification on Bursa failed to offset its share price’s sharp decline. It saw 78.21 million shares changing hands, making it the most actively traded stock on Bursa.

The regulator also suspended the proprietary day trading and intraday short selling of Prestariang after the last done price of the stock dropped more than 15 sen or 15% from the reference price.

Prestariang shares closed at a six-year low of 30.5 sen before the trading halt yesterday, from 29.6 sen on Jan 20, 2012, with a market capitalisation of RM147.1 million.

To recap, the SKIN project is 70%-owned by Prestariang, with the remaining 30% reportedly owned by Muhammad Nagib Gopal Abdullah, Raja Azmi Adam Nadarajan and Faisalludin Mohamat Yusuff via their 30% stake in project owner Prestariang SKIN, whose chief executive officer is Raja Azmi.

On July 18 last year, Prestariang SKIN signed the concession agreement with the home affairs minister on implementing SKIN by way of a public-private partnership. The project is a 15-year concession, with three years of build and deployment phase and 12 years of maintenance and technical operation phase.

It is said that payment to Prestariang was to only commence upon the full commissioning of the system after three years with an average annual payment of RM294.7 million from years four to 15 during the maintenance and technical operation phase.