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Rich Capital JV receives default notice from Batam project contractor
OXLEY Karya Indo Batam (OKIB), a joint-venture vehicle linked to Rich Capital, has received a notice of default from the main contractor of the Oxley Convention Centre development project in Batam, Indonesia.
The contractor, Rich-Link Konstruksi (RLK), is alleging that OKIB breached contract terms by not making payments for the project amid certified progress payments of IDR32.7 billion (S$3.2 million), Rich Capital said in a bourse filing on Wednesday. OKIB received RLK's notice on Sept 9.
OKIB is a 50-50 joint venture between OBPL, an indirect subsidiary of Rich Capital, and an Indonesian partner, Karya Indo Batam (KIB). The contractor RLK is a joint operation between Rich-Link Construction (RLC), Rich Capital's associate company, and Indonesian firm Alva Lambuan.
In the default notice, RLK demanded that OKIB rectify alleged defaults within three days from the date of the letter, or that it would suspend or terminate the construction contract.
RLK also said that OKIB had displayed an intention to renounce the contract, as OKIB had allegedly approached other contractors since early-2019.
In a Sept 12 letter, OKIB responded that it is not in breach of the contract, given that it had withheld payment due to RLK's alleged failure to post a performance bond.
OKIB also called RLK's allegation regarding the replacement contractors "baseless", adding that RLK is not entitled to suspend works or terminate the contract, as that would allegedly constitute a default.
Rich Capital said it will update shareholders if there are any material developments to the project. The company's shares have been voluntarily suspended since June 27. They last traded at 0.3 Singapore cent on June 21.