MAHB expects LAD talks to complete ‘this year’

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KUALA LUMPUR: Malaysia Airports Holding Bhd (MAHB) expects to complete its discussions with the joint venture of UEM Construction Sdn Bhd and Bina Puri Holdings Bhd (UEMC-Bina Puri JV) "this year", over the quantum of the liquidated and ascertained damages (LAD) that the JV will have to pay for causing the delay in the completion of klia2 in Sepang.

MAHB managing director Datuk Badlisham Ghazali said MAHB (fundamental: 1; valuation: 1.4) informed The Edge Financial Daily about this, when met at the Global Airport Development Asia 2015 conference here today.

On the quantum MAHB is looking at, he only said, "I have to present it to the board" and that MAHB, as a listed entity, will make the announcement via Bursa Malaysia.

Transport Minister Datuk Seri Liow Tiong Lai revealed in Parliament on Monday (June 8) that MAHB was still in talks with the UEMC-Bina Puri JV.

The LAD, invoked on June 16, 2013, amounts to RM199,445.40 per day. This works out to about RM6 million per month.

The delay in the completion of the airport had caused the initial cost of klia2 to balloon from RM1.7 billion to RM4 billion.

Despite this, the certificate of practical completion (CPC) was issued to the UEMC-Bina Puri JV in February this year, for the construction of the main terminal building. It was nine months after the opening of klia2 on May 2, 2014.

The main terminal construction contract was worth RM997.23 million.

To recap, MAHB had on Feb 4 this year, said the CPC for klia2’s terminal building was received by the UEMC-Bina Puri JV on Feb 2, “wherein the effective date of the CPC was Jan 26”.

“The defects liability period will also commence on Jan 27, 2015 and expire on Jan 26, 2017,” the airport operator had said then.

A CPC is a documented verification in which all works and tasks included in a contract have been satisfactorily completed. With the CPC, the responsibility of the terminal building will be handed over to MAHB.

MAHB closed 0.5 sen or 0.8% lower at RM6.35 today, giving it a market capitalisation of RM10.49 billion.

(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)