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Date : 20 August 2014

TRANSACTIONS (CHAPTER 10 OF LISTING REQUIREMENTS): RELATED PARTY TRANSACTIONS TALIWORKS CORPORATION BERHAD - SIGNING OF JOINT VENTURE AGREEMENT BETWEEN THE COMPANY AND LGB ENGINEERING SDN. BHD.

TALIWORKS CORPORATION BERHAD

TypeAnnouncement
SubjectTRANSACTIONS (CHAPTER 10 OF LISTING REQUIREMENTS)
RELATED PARTY TRANSACTIONS
DescriptionTALIWORKS CORPORATION BERHAD
- SIGNING OF JOINT VENTURE AGREEMENT BETWEEN THE COMPANY AND LGB ENGINEERING SDN. BHD.

TALIWORKS CORPORATION BERHAD (“Taliworks” or “the Company”) - Signing of Joint Venture Agreement between the Company and LGB Engineering Sdn. Bhd.

Further to the announcement made on 27 June 2014 on the acceptance of letter of award of Unit Perancang Ekonomi Negeri (“UPEN”) project known as “Pengagihan Semula Kapasiti Reka Bentuk Air Terawat Dari Loji Rawatan Air Sungai Selangor Fasa 3 (SSP3) – Sebagai Projek Mitigasi Kekurangan Bekalan Air di Selangor, Wilayah Persekutuan Kuala Lumpur dan Putrajaya (Pakej 3 : Kerja-kerja Membekal dan Memasang Paip Keluli Bergarispusat 1200 mm dan Kerja-kerja Berkaitan Dari Bukit Jelutong, Shah Alam ke Bukit Raja, Klang, Selangor)” (hereinafter referred to as the “Project”), the Board of Directors is pleased to announce that the Company had on 20 August 2014 entered into a Joint Venture Agreement (“JVA”) with LGB Engineering Sdn. Bhd. (“LGBE”) in the name of LGB-Taliworks JV for the purpose of undertaking and completing the supply and installation of 1200 mm diameter steel pipes from Bukit Jelutong, Shah Alam to Bukit Raja, Klang, Selangor (hereinafter referred to as the “Works”) and other ancillary works as necessary for the completion of the Works as specified in the JVA in relation to the Project.

2. DETAILS OF THE JOINT VENTURE 

2.1 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 comprising 25,000,000 ordinary shares of RM1.00 each and an issued and paid-up share capital of RM17,250,000.00 comprising 17,250,000 ordinary shares of RM1.00 each.

LGBE is accorded with the highest grade, Grade G7, in its registration with the Construction Industry Development Board (CIDB) and certification in the Sijil Perolehan Kerja Kerajaan. 

The principal activity of LGBE is in the construction of civil engineering works and buildings but with particular specialization in water supply projects.

There is no transaction by the Company with LGBE for the preceding twelve (12) months except for the construction and completion of Raw Water Pumping Main and Interconnection at Matang Pagar Reservoir (SSP1 project”) by the LGB-Taliworks Consortium to Taliworks Construction Sdn. Bhd.

2.2 The details of the Project

Project Sum

:

RM30,639,779.00

Estimated time frame for construction

:

12 months

Estimated date of completion

:

6 July 2015

2.3 Salient Terms of the JVA


The salient terms and conditions of the JVA are as follows:-

2.3.1 The percentage of participation and interest

The percentage of participation and interest of the Parties as between themselves in and to the assets, liabilities, costs, profits and losses arising out of the execution and completion of the Works and under the joint venture (except as otherwise expressly agreed to the contrary by the Parties) shall be:

Names of the Parties

Percentage equity participation in the Joint Venture

LGBE

Proportionate to LGBE’s scope of Works as set out in the JVA which is approximately fifty two per cent (52%).

Taliworks

Proportionate to Taliworks’ scope of Works as set out in the JVA which is approximately forty eight per cent (48%).

2.3.2 Source of Fundings

The Company is to fund its portion of the total costs of the Project from progressive claims made against the employer i.e. UPEN. Any shortfall in working capital is expected to be funded from internally generated funds. The Company’s share of the value of the Project is estimated to be RM14.71 million based on the forty eight per cent (48%) participation in the joint venture.

All funds or additional funds as from time to time required by the joint venture for the purpose of the Works shall be furnished by LGBE and the Company in accordance with their respective proportionate share or any revision thereof subject to the terms and conditions set out above and in the JVA thereto.

2.3.3 Termination of the JVA and the joint venture

The JVA and the joint venture shall be terminated when the Project has been performed and completed and all matters outstanding (including, without limiting to 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 and the Project.

3.    RATIONALE AND PROSPECTS FOR THE JOINT VENTURE 

The joint venture is in line with the ordinary course of business of Taliworks which is investment holding, provision of contracting, project and management services. The joint venture with LGBE as the lead partner is in line with the requirement of the Project that the lead partner must be graded “G7” by the Construction Industry Development Board (“CIDB”) with certification in the Sijil Perolehan Kerja Kerajaan.

4.     RISKS FACTORS

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



Although the Company will closely monitor the progress of the Works in order to minimise any delays, there can be no assurance that any change to these risks would not have certain material adverse effect on its business.

5.     FINANCIAL EFFECT

The joint venture is not expected to have any material effect on the net assets per share and gearing of the Company for the financial year ending 31 December 2014 but is expected to contribute positively to the earnings of the Group.


6.     DIRECTORS’ RECOMMENDATION

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 that the joint venture is 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 in the joint venture by virtue of his directorship and indirect shareholdings in LGBE.

Dato’ Lim Chee Meng, a substantial shareholder of the Company is deemed to be interested in the joint venture by virtue of his indirect 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 in the joint venture.

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) of the Listing Requirements is 1.4% based on the total project costs attributable to the Company compared to the total assets of the Company as at 31 December 2013.


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 the 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 20 August 2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Announcement Info

Company NameTALIWORKS CORPORATION BERHAD  
Stock Name TALIWRK    
Date Announced20 Aug 2014  
CategoryGeneral Announcement
Reference NoCK-140820-627FD

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