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BURSA ANNOUNCEMENTS

Date : 30 September 2015

OTHERS TALIWORKS CORPORATION BERHAD ("TALIWORKS" OR "THE COMPANY") - RECEIPT OF LETTER OF ACCEPTANCE FROM PENGURUSAN ASET AIR BERHAD TO LGB TALIWORKS CONSORTIUM SDN BHD, A 20% ASSOCIATE OF TALIWORKS - JOINT VENTURE AGREEMENT WITH LGB ENGINEERING SDN BHD

TALIWORKS CORPORATION BERHAD

Type Announcement
Subject OTHERS
Description
TALIWORKS CORPORATION BERHAD ("TALIWORKS" OR "THE COMPANY") 
 - RECEIPT OF LETTER OF ACCEPTANCE FROM PENGURUSAN ASET AIR BERHAD TO LGB TALIWORKS CONSORTIUM SDN BHD, A 20% ASSOCIATE OF TALIWORKS
- JOINT VENTURE AGREEMENT WITH LGB ENGINEERING SDN BHD

1.   Introduction

On 30 September 2015, the Company has entered into a Joint Venture Agreement (“JVA”) with LGB Engineering Sdn. Bhd. (“LGBE”) for the purpose of the construction and completion of Hulu Langat balancing reservoir with 92 ML capacity (the “Works”) and other ancillary works as necessary for the completion of the Works as specified in the JVA in relation to the project known as “Proposed Development of Langat 2 Water Treatment Plant and Water Reticulation System in Selangor Darul Ehsan / Wilayah Persekutuan Kuala Lumpur – Pakej 7 – Membina dan Menyiapkan Kolam Air Imbangan Hulu Langat Berkapasiti 92 Juta Liter” (“Project”).

The Project was awarded by Pengurusan Aset Air Berhad (“PAAB”) to the Company’s 20% associate company, LGB Taliworks Consortium Sdn Bhd (“LGBTC”) via a Letter of Acceptance dated 28 September 2015 which was received by the Company on 30 September 2015.

 

2.   Details of the JVA

2.1 Information on LGBTC

LGBTC was incorporated on 23 September 2015 under the Companies Act, 1965 as a private limited company and having its place of business at Level 20, Menara LGB, No.1, Jalan Wan Kadir, Taman Tun Dr. Ismail, 60000 Kuala Lumpur.

It has an authorised share capital of RM1,000,000.00 divided into 1,000,000 ordinary shares of RM1.00 each and an issued and paid-up share capital of RM1,000,000.00 divided into 1,000,000 ordinary shares of RM1.00 each.  The percentage of shareholding and interest between the LGBE and Taliworks (“the Parties”) are as follows:

Shareholders Percentage of Shares Held
LGBE  80%
Taliworks     20%

The shareholders of LGBTC (i.e. Taliworks and LGBE) undertake to increase the eventual issued and paid-up share capital of LGBTC up to RM4,000,000.00. Hence, the Board of Taliworks had approved its eventual equity participation in LGBTC up to RM800,000.00 comprising of 800,000 ordinary shares of RM1.00 each in order to maintain its 20% equity interest in LGBTC. LGBTC will be regarded as an associate company of Taliworks.

2.2 Information on LGBE

LGBE was incorporated in Malaysia on 31 March 1978 under the Companies Act, 1965 as a private limited company and having its place of business at Level 20, Menara LGB, No.1, Jalan Wan Kadir, Taman Tun Dr. Ismail, 60000 Kuala Lumpur.

It has an authorised share capital of RM25,000,000.00 divided into 25,000,000 ordinary shares of RM1.00 each and an issued and paid-up share capital of RM17,250,000.00 divided into 17,250,000 ordinary shares of RM1.00 each.

LGBE is registered with the Construction Industry Development Board Malaysia (“CIDB”) and is accorded with the highest grade, Grade 7 by CIDB.  LGBE has the Government Work Procurement Certificate (Sijil Perolehan Kerja Kerajaan) (“SPKK”) issued by CIDB.  

The principal activities of LGBE are in civil engineering and building construction with particular specialisation in water supply projects.

There is no transaction by the Company with LGBE for the preceding twelve (12) months except for the following:

PENGAGIHAN SEMULA KAPASITI REKABENTUK AIR TERAWAT DARI LOJIRAWATAN AIR SUNGAI SELANGOR FASA 3 (SSP 3) – SEBAGAI PROJEK MITIGASI KEKURANGAN BEKALAN AIR DI SELANGOR, WILAYAH PERSEKUTUAN KUALA LUMPUR DAN PURAJAYA PAKEJ 3 :  KERJA-KERJA MEMBEKAL DAN MEMASANG PAIP KELULI BERGARISPUSAT 1200MM DAN KERJA-KERJA BERKAITAN DARI BUKIT JELUTONG, SHAH ALAM KE BUKIT RAJA, KLANG, SELANGOR.

2.3 The details of the Project

The Project Sum is RM75,867,139.00. The estimated time frame for the Works in respect of the Project is 27 months.

2.4 Salient Terms of the JVA

The purpose of the Parties entering into the JVA is solely to undertake and to complete the Works in respect of the Project and not for any other purposes. Nothing contained in the JVA or in any subsequent contracts entered into pursuant to the JVA shall be construed as a limitation of the powers or rights of each Party to carry on its separate business for its sole benefit provided always that neither Party shall compete with LGBTC in respect of the Works and/or any matters arising from the JVA.

LGBTC undertakes the following components of the Works in respect of the Project:

  1. carrying out any function such as entering into any agreement, contract or arrangement, including the planning and conducting of negotiations with third parties on any matters relating to the Project and activities by LGBTC;
  2. carrying out any function which is approved by the board of directors of LGBTC, including but not limited to execute any agreement or contract;
  3. the overall project management, planning and coordination of the Works in respect of the Project; and
  4. the procurement, construction and completion of the Works as specified in the formal contract to be entered between LGBTC and PAAB in respect of the Project.

Subject to the approval of PAAB, LGBTC shall sub-contract 70% of the Works (“Sub-Contract Works”) to Taliworks Construction Sdn Bhd, a wholly owned subsidiary of Taliworks upon such terms and conditions to be mutually agreed between LGBTC and Taliworks Construction Sdn. Bhd. The shareholders’ mandate in respect of the Sub-Contract Works had been obtained at the 24th Annual General Meeting of Taliworks.

2.5  Source of Funding

Taliworks has funded its equity participation in LGBTC via internally generated funds.

2.6 Termination of the JVA and LGBTC 

The JVA can be terminated, subject to mutual agreement between the Parties, and LGBTC can be dissolved when the Project has been performed and completed and all matters outstanding (including, without limiting the generality of the foregoing, rectification of defects and resolution of claims or disputes arising therefrom) have been dealt with in accordance with the terms of the JVA.

 

3.  Rationale and Prospects

The JVA will encourage Taliworks’ participation with LGBE in respect of future opportunities in the construction of civil engineering works in water supply projects.

The Project is expected to contribute positively in the long-term growth and profitability of Taliworks.

 

4.  Risks Factors

The Project is subject to normal construction risks which includes but not limited to the changes in general economic conditions and/or circumstances, government regulations and the inflation and fluctuation of material and labour cost.

The Company will closely monitor the progress of the Works in respect of the Project in order to minimise any delay or costs over-run and that any change to these risks would not have certain material adverse effect on its business.

 

5.  Financial Effect

The Project is not expected to contribute materially to the earnings of the Group for the financial year ending 31 December 2015 as the Project is still in the early stage of mobilization and planning. However, the Project is expected to contribute positively to the future earnings of the Group.

 

6.  Audit and Risk Management Committee’s and Directors’ Recommendation

The Audit and Risk Management Committee of the Company is of the view that the JVA are in the best interest of the Company, fair, reasonable and on normal commercial terms and not detrimental to the interest of the minority shareholders since the entering into the JVA with LGBE as the lead partner meets the requirement of the Project and has the Government Work Procurement Certificate (Sijil Perolehan Kerja Kerajaan) (“SPKK”) issued by CIDB.    

The directors of Taliworks (save and except for interested directors) are of the opinion that the terms of the JVA are fair and reasonable and are in the best interest of the Company.


7.  Directors and Major Shareholders’ Interest

Mr. Lim Chin Sean, a director and substantial shareholder of the Company is deemed to be interested by virtue of his directorship and direct shareholdings in LGBE.

Dato’ Lim Chee Meng, a substantial shareholder of the Company is deemed to be interested by virtue of his direct shareholdings in LGBE.

Save as disclosed above, none of the other directors, major shareholders and/or persons connected with them has any interest, direct or indirect.

 

8.  Percentage Ratios under Chapter 10 of the Main Market Listing Requirements

The highest percentage ratio applicable to the JVA under paragraph 10.02(g)(vii) of the Listing Requirements is 0.1% based on the total eventual equity participation compared to the net assets of the Group as at 31 December 2014.      

 

9.  Approvals

The JVA is not subject to the approval of the shareholders of Taliworks and/or any regulatory authorities.

 

10.  Documents for Inspection

The JVA is available for inspection during normal business hours from Mondays to Fridays (except public holidays) at the business address of Level 20, Menara LGB, No.1, Jalan Wan Kadir, Taman Tun Dr. Ismail, 60000 Kuala Lumpur for a period of three (3) months from the date of this announcement.

 

This announcement is dated 30 September 2015.

 






Announcement Info

Company Name TALIWORKS CORPORATION BERHAD
Stock Name TALIWRK
Date Announced 30 Sep 2015
Category General Announcement for PLC
Reference Number GA1-30092015-00035



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