Losing a contract is always painful more so at this time of the year. Jobs are at risk and lots of people might have difficulty to pay their next bill. Pity WCT.
The following is from The Star.
Wednesday January 7, 2009
WCT stands to lose order book RM1.3bil from cancellation of contract
By FINTAN NG and K.C. LAW
PETALING JAYA: Shares of WCT Bhd (WCT) plunged yesterday, hitting limit-down after 12 minutes of trading as investors feared the company would suffer massive losses due to the cancellation of the RM4.6bil Nad Al-Sheba race course project in Dubai.
In an announcement to the Bursa Malaysia yesterday evening, the company said its share of the potential losses of order book was “approximately RM1.29bil.” read more here
The following from Insider:
WCT views the cancellation as a breach of contract while the client says it was due to non-adherence to the schedule on WCT’s part.
OSK Research understands that the WCT management is seeking compensation for the cancellation of the project and also making a claim for unbilled portions of the work that has been done.
Fifty per cent of the project’s value has been billed and WCT’s outstanding portion now stands at RM1 billion.
“Regardless of who is at fault, we see this as posing a risk to WCT’s reputation as its execution capability may be in question,” says OSK Research.
“In our view, it would also hamper the group’s ability to secure more jobs in the Middle East region, on which it relies for projects. read more
Termination is always a risk in construction contract. However, this is never taken seriously until it happened. Never mind, now they will be very busy going thru the book.
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