Thursday, January 8, 2009

WCT Berhad. Still Stay As A Potential Share.

Here is an excerpt of an interview with WCT executive director Loh Siew Choh, who allays concerns of its infrastructure and building projects in the Middle East

WCT Bhd is determined to stay on and bid for more jobs in the Gulf States despite losing the job to build the Nad Al Sheba Dubai Racecourse in the United Arab Emirates (UAE). In an interview with Business Times in Shah Alam yesterday, WCT executive director Loh Siew Choh allayed concerns of its other infrastructure and building projects in the Middle East.

WCT's shares have taken a dive since UAE's Meydan LLC said it cancelled the AED4.6 billion (RM4.6 billion) contract with WCT Bhd and Arabtec Construction LLC to build the racecourse.

The stock, which was suspended two days ago after a 30 per cent drop to RM1.29, fell as much as 28 per cent yesterday to 93 sen before ending the day at RM1.14.

The late evening price recovery could have been attributed to WCT's substantial shareholders, namely Malaysia's Employees Provident Fund and Singapore government investment arm Temasek Holdings buying more WCT shares in the wake of panic selling by other investors.

Below is an excerpt of the interview:

Question: Has Meydan LLC's cancellation of the Nad Al Sheba Dubai Racecourse in the United Arab Emirates (UAE) caused bankers to doubt WCT Bhd's ability to repay loans?

Answer: We have solid backing from our bankers. For this particular project, Dubai's Mashreq Bank facilitated the performance bond of RM178 million. It is the largest project financing bank in the UAE. In fact, we're also using them to part-finance our construction of the Formula 1 Abu Dhabi project.

Q: Why are you optimistic of recovering the performance bond?

A: Our joint venture company's view is that the termination is wrongful. While we have a right to arbitration, we prefer to settle the claims amicably and if possible, promptly. It is still early days, we've just sat down for the first round of meeting with our partner Arabtec to determine the exact quantum of work done. The second round of talks is set for next week.

Q: What is WCT's financial standing?

A: As at September 30 2008, we've about RM600 million in cash. That is sufficient to tide over any eventuality.

Q: Has this incident prompted WCT Bhd to think about looking elsewhere to bid for jobs?

A: Although we're disappointed about this job cancellation, we've to put things into perspective. We still have our jobs in Abu Dhabi, Bahrain and in Qatar. Our focus is still very much in the Gulf States, we will continue to bid and negotiate for jobs there. We view this (job cancellation) as an isolated incident. We've made our name as early as six years ago. We'll continue to strengthen our presence there.

Q: What is the estimated value of job bids WCT has put forward that is likely to materialise this year?

A: We try as much as we can to negotiate and bid for high margin jobs. Last year we managed to replenish our orderbook by about RM2 billion worth of jobs. This year we will strive to do better.

Q: Could you give an update on your RM3.3 billion job to construct the Abu Dhabi Formula One Track and the RM1.55 billion Bahrain City Centre project?

A: The Abu Dhabi Formula One project is jointly undertaken with our partner Cebarco. We've completed 60 per cent of the job scope and there has been no problems with the collection of payment. Basically, whatever we've billed to the project owner is being paid on time. This project is set to be completed by the middle of this year.

Over in Bahrain, we've already completed the shopping mall of 2 million sq ft floor space a few months ago. We're now carrying out fit-out works at the two 5-star hotels. We hope to wrap up by the end of this year.

Q: Did substantial shareholders namely EPF and Temasek pare down their stakes in WCT?

A: EPF and Temasek had actually bought more WCT shares. You can check their filings with the stock exchange. When EPF contacted us two days ago, we gave them the facts and figures and that basically cleared the air. It does not help when some people misinterpreted and reported WCT losing money when this is about losing a job order. Our order book is now a little thinner from the loss of this job but WCT has always been and still is profitable.

Article from Business

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