KUALA LUMPUR (Nov 10): Mudajaya Group Bhd announced today it has withdrawn from RM810 million contract it was awarded last year by Consortium Zenith Construction Sdn Bhd for construction work in Penang over "uncertainties" of the project.
Under the deal, it was supposed to build major roads under Package 2 (the Ayer Itam to Lebuhraya Tun Dr Lim Chong Eu by-pass) and the Third Link Project in Penang.
It bagged the project from Consortium Zenith — formerly known as Consortium Zenith BUCG Sdn Bhd — via Mudajaya Corp Bhd, its wholly-owned unit, in December 2016.
"We wish to announce that Mudajaya Corp and Consortium Zenith have, on Nov 10, 2017, mutually decided that it would be difficult to proceed with the obligations under the letter of award (LoA) and further proceed with the project due to the following uncertainties," its filing to Bursa Malaysia today stated.
The uncertainties it referred to were in relation to securing the exact date for site possession, and in signing the construction contract. It also said information provided for the project has not been sufficient, causing a lapse of time to the timelines in the LoA.
As such, both parties have agreed to mutually and amicably withdraw and end each other's obligations under the LoA. "As such, the LoA was mutually withdrawn and ended effective from Nov 10, 2017," it added.
It also updated that to date, the project has yet to commence, and that the mutual withdrawal is not expected to materially affect Mudajaya's earnings and net assets as the group has concurrent ongoing projects.
The project was initially targeted to be completed in 36 months from the date of site possession, which was expected to happen in the second half of 2017.
Shares in Mudajaya closed one sen higher at RM1.13 today, for a market capitalisation of RM668.3 million.