Clients to assume SCIB's debt obligation for six projects in Qatar and Oman

KUALA LUMPUR (Sept 20): Sarawak Consolidated Industries Bhd (SCIB) is set to gain US$13.32 million (RM60.72 million) after the clients of six contracts in Qatar and Oman agreed to take on the debts that the group owes to its subcontractors for the projects.

SCIB's US$133.42 million debt obligations to the subcontractors are to be taken up by the projects' respective clients, and are to be fulfilled by utilising the US$146.74 million debts the clients owe SCIB and its unit SCIB International (Labuan) Ltd (SCIBL), the group said in a Bursa Malaysia filing.

SCIB said it has inked novation agreements with Pavilion Qatar Engineering Co WLL, Revenue International LLC, Interceptor Trading & Contracting WLL and Skyview Trading & Contracting WLL in the two countries to modify their prior settlement agreements to facilitate the debt resolution.

"The clients undertake to perform the obligations of SCIB and SCIBL to pay [amount owing to the subcontractors] to the respective subcontractors under the settlement agreement as from the effective date (June 30, 2022) and to be bound by the terms of the settlement agreement in every way in place of SCIB and SCIBL.

"It is agreeable and acknowledged by the respective subcontractors to collectively release and discharge SCIB and SCIBL from all claims and demands in respect of the settlement agreements as from the effective date," said the Sarawak-based civil engineering group.

SCIB said the parties have agreed that the clients are to pay the differential sum of RM60.72 million — net sum between the amount owed by the clients to SCIB and the amount owed to the subcontractors — to the group on or before June 30, 2023.

"The final claims stated in the settlement agreements are consistent with the provisions that were taken up in the accounts.

"The effect of the novation agreements is to substitute the obligations of SCIB and SCIBL to pay the subcontractors under the settlement agreements in which the obligations shall now rest on the clients," it added.

SCIB in November last year signed a settlement agreement with the projects' clients to terminate the engineering, procurement, construction, and commissioning contracts awarded to SCIB and SCIBL to mitigate risks arising from long-overdue debts owed by its creditors.

The contracts included jobs which pertained to the construction of villas, buildings and service centres, and civil works for a fire water project in Qatar and Oman.

Shares in SCIB finished unchanged at 14.5 sen on Tuesday (Sept 20), giving the group a market capitalisation of RM87.41 million.