Vivocom confirms work on Gateway Klang project 'temporarily halted'

KUALA LUMPUR (June 5): Vivocom Intl Holdings Bhd has confirmed it has temporarily halted works on the Gateway Klang project to facilitate on-going discussion between the project owner and China's state-owned China Railway Construction Corp (CRCC).

It was responding to The Edge report over the weekend that Vivocom's sub-contract for Gateway Klang (formerly known as One Gateway Klang), a commercial development project, has hit a snag due to delay in payments by the project's developer Lagenda Erajuta Sdn Bhd to the main contractor CRCC Malaysia Bhd, a local subsidiary of CRCC. The sub-contract is awarded by CRCC Malaysia to Vivocom.

In a filing with Bursa Malaysia today, Vivocom said however that it has not received any official letter of termination from CRCC for the Gateway Klang contract.

"Notwithstanding (this), the group has temporarily halted work on the contract site, while awaiting further instruction from CRCC," it added. 

Vivocom said the temporary halt of the project is not expected to materially affect the group's earnings and net assets, as it has other concurrent on-going projects.

“The board of directors takes note of its obligations under the listing requirements on timely disclosure of material developments and will make the necessary announcement upon receipt of the official notification from CRCC, if any, on the above matter,” it said.

Citing a mutual determination letter dated April 27, 2016, The Edge reported Lagenda owed an outstanding amount of RM15.21 million to CRCC Malaysia. This led to CRCC Malaysia suspending construction works for the Gateway Klang project.

During a site visit by The Edge last week, there were no construction activities going on, nor machineries found other than leftover half-way built pillars and underbrush.

Lagenda had in April 2014 awarded Gateway Klang's construction work to CRCC Malaysia as the main contractor, which, according to Vivocom, has sub-contracted the job to its wholly-owned subsidiary, Vivocom Enterprise Sdn Bhd.

Vivocom's share price has been on a decline since late August last year. The stock has more than halved from last year's peak of 29 sen.

The group, formerly known as Instacom Group Bhd, had attracted keen interest in the past two years, as it was perceived as a proxy to ride on CRCC's jobs in Malaysia.

This morning, the counter was the most actively-traded stock, with 42.27 million shares having crossed hands. It fell into an intra-day low of 11.5 sen. At market break, the counter pared its losses to trade at 12 sen, down one sen or 7.69% at 2.42pm.

Meanwhile, Vivocom’s Warrant B (Vivocom-WB) was the sixth most actively-traded counter in the morning session, with 21.42 million shares exchanging hands. Its share price fell one sen or 25% at 3 sen at 2.42pm. — theedgemarkets.com

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