Thursday 28 Mar 2024
By
main news image

GEORGE TOWN: CME Group Bhd has terminated its joint venture (JV) agreement with Ruark No 11 Pty Ltd ATF the Oasis Unit Trust (Ruark) and Central Park (Qld) Pty Ltd (Central Park) to develop a mixed project on two parcels of contiguous land in Mandurah, Australia.

The termination, effective yesterday, is expected to have “an immediate impact on the earnings of the group for the financial year ending Dec 31, 2015”, said CME, which manufactures and sells firefighting equipment, in its filing with Bursa Malaysia yesterday.

It may also have an impact on its net assets for FY15 “as the properties are subject to a mortgage securing the development loan. The board will pursue legal action (if necessary) to safeguard the assets of CME,” it noted.

However, it assured that the potential future earnings contribution from the project — as CME shall continue the development alone or with a new potential JV party — may enhance the group’s earnings .

The termination, it explained, is on the basis of Ruark’s continuing non-compliance with the JV agreement.

“Having considered the terms of the JV agreement and after taking advice from legal counsel and a project management expert appointed by CME in Western Australia, the board is of the view that Ruark has committed ongoing breaches of the JV agreement, which [had] remained unrectified for more than 30 days, entitling CME to terminate the JV agreement,” it said.

CME said it has, via its solicitors, served the termination notice on Ruark and Central Park. Ruark, it said, has purported to terminate the JV agreement, on the same day.

It added that further material developments in relation to the outcome of the termination would be announced in due course.

CME, its wholly-owned Australian unit CME Properties (Australia) Pty Ltd, Ruark (initially known as Ruark Properties Pty Ltd ATF the Oasis Unit Trust) and Central Park entered into the JV agreement on Aug 12 last year for the mixed project in western Australia.

The estimated gross development value of the project was A$112 million, with an estimated cost of A$90.45 million, according to CME last year.

 

This article first appeared in The Edge Financial Daily, on September 22, 2015.

      Print
      Text Size
      Share