Bintai Kinden believes it has good grounds of defence against Axbena’s RM28m claim for liquidated damages

• JMI is being sued by Axbena Sdn Bhd for not completing a RM10.92 million subcontract — for the supply of medical gas system for a teaching hospital at the Universiti Teknologi Mara (UiTM) campus in Puncak Alam, Selangor — by the completion date.
• In a Bursa Malaysia filing on Thursday (April 13), Bintai Kinden said the delay in the completion was mainly due to the delay caused by Axbena as the main contractor which did not complete the project in time.

KUALA LUMPUR (April 13): Bintai Kinden Corporation Bhd said its sub-subsidiary Johnson Medical International Sdn Bhd (JMI), which is facing a RM27.7 million liquidated damages claim, has good grounds of defence.

JMI is being sued by Axbena Sdn Bhd for not completing a RM10.92 million subcontract — for the supply of medical gas system for a teaching hospital at the Universiti Teknologi Mara (UiTM) campus in Puncak Alam, Selangor — by the completion date.

In a Bursa Malaysia filing on Thursday (April 13), Bintai Kinden said the delay in the completion was mainly due to the delay caused by Axbena as the main contractor which did not complete the project in time.

“The board of Bintai Kinden is of the opinion that the financial and operational impact of this matter on JMI is minimal as the chances of defence is positive,” the mechanical and electrical engineering services provider said.

“The duration of the subcontract was from July 30, 2018 to Aug 2, 2019, in line with the duration imposed on the main contractor. The certificate of practical completion was issued on Feb 1, 2021, a delay of 513 days from the completion date,” it added.

Bintain Kinden said the subcontract allows for liquidated damages at a rate of 0.5% of the subcontract sum per calendar day or RM25,000 (whichever is higher) to be imposed in the event JMI fails to complete the work by the completion date.

“Axbena is now claiming for liquidated damages for RM27.7 million (calculated at 0.5% of RM10.92 million for 513 days) for not completing the subcontract by the completion date,” the group explained.

Bintai Kinden has previously announced that the court has fixed May 10 for case management.

The group had acquired JMI for RM50 million to expand its healthcare business segment. Bintai Kinden settled the acquisition with RM26 million cash and the issuance of 58.54 million worth of new shares to the vendor, Yeo Eng Lam, who ended up being the single largest shareholder in Bintai Kinden with a 10.55% stake.

Established in 1994, JMI is a medical engineering solutions provider focused on the manufacturing, supply and installation of operating theatres, critical care units and medical gas delivery systems and trading of medical equipment and supplies.

Bintain Kinden is also being sued by MBSB Bank Bhd for allegedly defaulting on a RM109 million Islamic financing facility. MBSB is claiming an outstanding amount of RM238.52 million from the group.

The facility was secured by Bintai Kinden's wholly-owned subsidiary, Optimal Property Management Sdn Bhd (OPM), to finance the construction of an on-campus accommodation for Kolej Teknologi Islam Melaka Bhd. 

Bintai Kinden said it is seeking an amicable settlement with the parties concerned in the matter.

Bintai said it is sourcing for the appropriate review and negotiation with the parties involved in the concession arrangement to reach amicable solutions to settle debts owing to MBSB. 

Bintai Kinden was classified as a Practice Note 17 issuer last month following OPM's default on the financing facility and the group’s termination by MBSB as the corporate guarantor. 

Shares in Bintai Kinden closed unchanged at four sen on Thursday, giving the group a market capitalisation of RM35.73 million. The counter has slipped 50% in the past month.