Koon Holdings ends joint venture with Penta-Ocean amid debt restructuring
Vivienne Tay
Singapore
KOON Holdings on Monday said the joint venture (JV) between its unit Koon Construction & Transport (KCT) and Japanese firm Penta-Ocean Construction has been terminated.
The group said the move is in view of the group's ongoing restructuring exercise. Following the termination, Koon Holdings and KCT will no longer need to provide corporate guarantees in respect of the JV - significantly reducing their contingent liabilities and obligations.
The JV was formed for a S$1.108 billion project awarded by the Ministry of Transport (MOT) in 2014 to carry out land preparation works for Changi Airport's expansion.
The project is nearing completion, with over 90 per cent of works being completed as at October 2019, the group said.
With the termination, Penta-Ocean will indemnify KCT against any claims the JV incurred and would be solely responsible for the completion of remaining works for the project.
All of the JV's rights and obligations for the project will also be taken over by Penta-Ocean, and KCT will be released and discharged from the contract's performance.
In connection with the termination, the JV has entered into a novation agreement with the transport ministry and Penta-Ocean to replace the existing contract. This will see Penta-Ocean assuming responsibility and liability for all works previously undertaken by the JV.
Koon Holdings said the termination and novation agreements are not expected to have any material impact on the group's consolidated net tangible assets and earnings per share for the financial year ending Dec 31, 2019.
Koon Holdings is an infrastructure and civil engineering service provider specialising in reclamation and shore protection works. KCT, meanwhile, is the group's main operating company.
On Nov 8, the High Court of Singapore granted a debt moratorium to mainboard-listed Koon Holdings and KCT, which lasts from Nov 7 to Feb 28. The companies had in October applied for court protection as they intend to propose and implement a scheme of arrangement as part of the group's restructuring exercise to restore their financial position.
Shares of Koon Holdings have been suspended since Aug 30.
