This article first appeared in The Edge Financial Daily on August 15, 2019

KUALA LUMPUR: Malaysian Resources Corp Bhd (MRCB) says it expects no material financial or operational impact from the arbitration that George Kent (Malaysia) Bhd had initiated over a dispute between the parties over financing options for their joint-venture (JV) company undertaking the construction of the Light Rail Transit Line 3 (LRT3).

In a filing with Bursa Malaysia yesterday, the group also said “none of its directors or substantial shareholders or persons connected to them, has any interest, direct or indirect, in the aforesaid arbitration proceedings”.

MRCB’s largest shareholder is the Employees Provident Fund with a 35.95% stake as at March 22, followed by Tan Sri Mohamad Salim Fateh Din, who in June last year stepped down from all posts that he had held in the group, with a 15.57% stake via Gapurna Sdn Bhd as at June 19.

On Tuesday, George Kent announced it had served a notice of arbitration on MRCB concerning the dispute involving the JV company — MRCB George Kent Sdn Bhd, which the group and MRCB formed in 2015 on a 50:50 basis to bid for, undertake and complete the LRT3 project.

George Kent said this is due to a difference of opinion with MRCB in the interpretation of certain provisions of their shareholders’ agreement in relation to the options for securing financing for the JV company, which Prasarana Malaysia Bhd appointed as the project delivery partner for the project in 2015.

The government subsequently changed the LRT3 project’s structure to that of a fixed price contract, which saw the JV company and Prasarana signing a revised deal for the project in January this year for RM11.4 billion.

MRCB shares slipped 2.5 sen or 2.89% to 84 sen yesterday, with a market capitalisation of RM3.71 billion. George Kent closed one sen or 0.93% lower at RM1.06, with a market value of RM570.93 million.