KUCHING: The clients of Sarawak Consolidated Industries Bhd (SCIB) and its wholly-owned subsidiary SCIB International (Labuan) Ltd (SCIBL) have agreed to take on the debts the latter owe to their sub-contractors in six projects in Qatar and Oman.
The agreement was reached after SCIB and SCIBL signed the respective novation agreements on Sept 20, 2022 with the clients and the respective subcontractors engaged by SCIB for the respective contracts.
SCIB and SCIBL’s total US$133.42 million debt obligations to the subcontractors will be taken up by the projects’ respective clients, and are to be fulfilled by utilising the US$146.74 million debts the clients owe SCIB and SCIBL.
“The client undertakes to perform the obligations of SCIB/SCIBL to pay Debt 2 (amounts owing to the subcontractors) to the respective subcontractors under the settlement agreement (dated Nov 10, 2021) as from the effective date (June 30, 2022) and to be bound by the terms of the settlement agreement in every way in place of SCIB/SCIBL.
“It is agreeable and acknowledged by the respective subcontractors to collectively release and discharge SCIB/SCIBL from all claims and demands in respect of the settlement agreement as from the effective date,” SCIB said in a filing with Bursa Malaysia.
To recap, SCIB was awarded by Pavilion Qatar Engineering Co W.L.L. a contract for the construction, completion and maintenance of six villas in Qatar. The company was also awarded a contract by Revenue International L.L.C. for the construction of nine residential villas in Al Hayl, Muscat, Oman. Both contracts were awarded in October 2019.
On the other hand, SCIBL was awarded four contracts in Qatar and Oman in 2020. These contracts are:
(1) Construction, completion and maintenance of 18 numbers of five-storey buildings, proposed new boundary wall, guard house and car parking located at Doha, Qatar (client: Interceptor Trading and Contracting W.L.L);
(2) Construction and completion of two units of service centres located at the region of ASl Khor, Qatar (Skyview Trading and Contracting W.L.L.);
(3) Civil works for the fire water project, Qatar (Pavillion Qatar Engineering Co W.L.L), and
(4) Complete construction of 20 villas at Street 14, Block 112, Ruwi, Muscat, Oman (Revenue International L.L.C.)
Pavilion Qatar Engineering and Revenue International owe SCIB about US$8.95 million and RM10.06 million respectively (debt 1) .
Interceptor Trading and Contracting, Skyview Trading and Contracting, Pavilion Qatar Engineering and Revenue International owe SCIBL about RM41.1 million, US$28.34 million, US$19.18 million and US$39.11 million respectively (Debt 1).
According to SCIB, the parties concerned agreed that the differential sum (between Debt 1 (amount owing by the clients to SCIB and SCIBl) and debt 2) shall be paid to SCIB/SCIBL on or before June 30, 2023.
The differential sum amounted to US$13.32 million.
“SCIB/SCIBL and the subcontractors shall be entitled to charge interest on any overdue amount at the rate not exceeding eight per cent per annum for each day that such amount is overdue until payment is actually received by SCIB and the subcontractors.
On the rationale of the novation agreement, SCIB explained: “Due to the default payment by the clients which triggered the termination clause of the settlement agreement dated Nov 10 2021, the company has taken necessary measures to protect SCIB/SCIBL’s interests in mitigating the risks arising from the long-overdue debts owing by the clients.
“SCIB/SCIBL had amicable discussions with the clients and subcontractors who have agreed to enter into the novation agreements to discharge all of SCIB/SCIBL’s liabilities/obligations towards the settlement agreements in regards to Debt 2.”
The novation agreements are to ensure that the clients make direct payment to the respective subcontractors and therefore does not involve SCIB/SCIBL.
