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Koon Holdings, Penta-Ocean Construction end joint venture
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.
Following the move, 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.
Shares of Koon Holdings have been suspended since Aug 30.