Bursa Announcements News

We refer to our announcement dated 4 March 2011.

Introduction

Gamuda Berhad (“Gamuda” or “the Company”) is pleased to announce that its jointly-controlled entity, MMC Gamuda KVMRT (PDP) Sdn Bhd (the “PDP”), has on 10 February 2012 executed the Project Delivery Partner Agreement (“PDP Agreement”) with Mass Rapid Transit Corporation Sdn Bhd (the “Owner”) in respect of the implementation of the project known as the Klang Valley Mass Rapid Transit Project-Sungai Buloh-Kajang line (the “Project”).

Parties to the PDP Agreement

The Owner

The Owner is a company incorporated in Malaysia with an authorised capital of RM50,000,000.00 divided into 50,000,000 ordinary shares, of which 10,000,002 are fully paid-up. All of the issued shares are owned by the Minister of Finance, Incorporated.

The PDP

The PDP is a company incorporated in Malaysia with an authorised capital of RM10,000,000.00  divided into 10,000,000 fully paid-up ordinary shares. All of the issued shares of the PDP are held in equal proportion by MMC Corporation Berhad and Gamuda.

The salient terms of the PDP Agreement

PDP’s responsibilities

The PDP shall be responsible for delivering to the Owner the Project as a fully functional and operating railway system within the agreed target cost and completion date.

As the project delivery partner, the PDP is responsible for the design of the Railway in accordance with the Owner’s Requirements and the approved Railway scheme.
 
To ensure delivery within the agreed target cost and completion date, the PDP is fully responsible for the due performance by all the contractors who are awarded by the Owner works packages comprised in the Project following competitive bidding exercises called by the Owner.

Once the awards of the works packages have been made by the Owner, instead of having to look to all 90 contractors, the Owner has only to look to the PDP for accountability in the Project delivery. In this respect, it shall be the PDP’s responsibility to manage, deal with, co-ordinate, supervise and interface all the contractors. In addition, the PDP is also responsible as the system integrator for the entire Project.

In the event that any of the contractors shall fail or default in its performance of the works, the PDP has the obligation to step in and self deliver the remaining works.

It is a term in all the works contracts with the contractors that in consideration of the PDP having the authority to manage, deal with, co-ordinate, supervise and interface the contractors, any disputes or claims (including for payments of works done) which the contractor may have arising from their respective works contract shall only be brought against the PDP and not the Owner. Notwithstanding such provision in the works contracts, in the event any of the contractors were to make any claims or take any proceedings against the Owner under the works contract, the PDP shall indemnify the Owner against such claims or proceedings.

Owner’s responsibilities

The main responsibilities of the Owner under the PDP Agreement are:

(a) to obtain the necessary approval for the Railway Scheme in respect of this Project;
(b) to obtain the EIA approval in respect of this Project;
(c) to deliver site possession to the PDP (in order for the PDP to deliver the same to the contractors) in accordance with the agreed schedule in the PDP Agreement; and
(d) to make payments for the works done by the contractors (in order for the PDP to make onwards payment to the contractors) in accordance with the terms of the PDP Agreement.

PDP is not allowed to tender for any of the Works

Save and except for the underground works package, the PDP is not allowed to participate in any of the tender for the works comprised in the Project.
 
Target Cost and Completion Date

The agreed target costs is the aggregate of all the awarded  works packages, the amount of contingency allowed and the amount of reimbursables incurred by the PDP in performing its services.

The allowed contingency is agreed at 15% of the aggregate of the awarded works packages. Both the Owner and the PDP are allowed to utilize the contingency.

The reimbursables include the PDP’s overheads, fees for engineering consultancy, quantity surveyors and system integration works and fees for site investigations and topographical survey. The amount of the reimbursables is fixed at RM2.85 Billion.

The target completion date for the entire Project is 31 July 2017.

In consideration of the PDP undertaking the services of a project delivery partner in accordance with the terms of the PDP Agreement and provided that the PDP successfully delivers to the Owner the Project within the agreed target cost, it shall be paid a fee which is equivalent to 6% (“Fee”) of the aggregate of all the awarded works contracts (excluding the value of the underground works package if the PDP wins the Swiss Challenge and is awarded the said package).

If the Project exceeds the agreed target cost, the PDP shall be liable for the cost over-run by the reduction of the Fee based on an agreed formula in the PDP Agreement.

Any liabilities arising from claims brought by or disputes with Contractors shall be fully borne by the PDP after the contingency has been exceeded and the PDP has no recourse to the Owner in respect of such excess. 

In the event that the PDP fails to complete the Project by the agreed completion date, the PDP is liable to pay to the Owner agreed liquidated damages of RM500,000.00 per day.

Swiss Challenge

In acknowledgement of the PDP as the original proponent of the Project, the Owner has agreed to grant to the PDP (through its nominated company which shall have the same shareholding as the PDP) a right of Swiss Challenge to match the best evaluated tender bid in respect of the underground works package.

In the event that the PDP’s nominated company is awarded the underground works package, the management and supervision of the underground works package shall be undertaken by the Owner themselves and not the PDP. Nevertheless, the PDP shall still be responsible for the overall delivery of the Project.

In the event that the PDP’s nominated company is not awarded the underground works package, the successful Contractor shall be dealt with in the same manner as all other works contractors for which the PDP shall be responsible for.

Source of Funds

Gamuda shall fund its share in the PDP through internally generated funds and bank borrowings.

Financial Effects

Share Capital and Substantial Shareholders’ shareholdings

The Project will not have any effect on the share capital and substantial shareholders’ shareholdings of Gamuda.

Earnings

The Project is not expected to have any significant effect on the earnings of the Gamuda Group for the financial year ending 31 July 2012. However, it is expected to contribute positively to the future earnings of the Gamuda Group.

Net Tangible Assets ("NTA")

The Project is not expected to have any significant impact on the NTA of the Gamuda Group for the financial year ending 31 July 2012.

Approval(s) Required

The execution of the PDP Agreement is not subject to the approval of the shareholders of Gamuda or any government authorities.

Directors' and Major Shareholders' Interests

None of the Directors, major shareholders or persons connected to them has any interest, direct or indirect, in the Project.

Statement by the Board of Directors

The Directors of the Company are of the opinion that the acceptance of the award of the Project is in the best interest of the Company.

This announcement is dated 10 February 2012.