You are here
Rich Capital JV receives termination notice from Batam project contractor
A JOINT-VENTURE vehicle linked to Rich Capital has received a notice of termination from the main contractor of its Oxley Convention City project in Batam, Indonesia.
In the notice received by Oxley Karya Indo Batam (OKIB) on Oct 23, the contractor Rich-Link Konstruksi (RLK) said that given OKIB's continued breaches, RLK intends to exercise its right to terminate the main contract and reserves all its rights against OKIB for losses suffered as a result of the breaches.
It added that it will proceed to remove the equipment, materials and plant as well as demobilise site security within three days, Rich Capital reported in its bourse filing on Saturday.
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 a letter dated Oct 24, OKIB responded that it refutes all of RLK's allegations and denies that RLK is entitled to terminate the construction contract. OKIB also reserves its rights with regard to RLK's wrongful termination and abandonment of works under the contract.
The notice comes about a month after OKIB received a notice of default from RLK, alleging that OKIB had breached contract terms by not making payments for the project despite having certified progress payments of 32.7 billion rupiah (S$3.2 million). RLK demanded that OKIB rectify the alleged defaults within three days from the date of the letter, or RLK would suspend or terminate the construction contract.
At the time, OKIB responded that it was not in breach of the contract and had withheld payment due to RLK's alleged failure to post a performance bond.
Rich Capital said it will update shareholders if there are any material developments on the situation. The company's shares have been voluntarily suspended since June 27. They last traded at 0.3 Singapore cent on June 21.