Translated by Google Translator:
This article first appeared in The Edge Financial Daily, on July 12, 2016.
KUALA LUMPUR: Southern Steel Bhd has terminated the services of Italian plant maker Danieli & C Officine Meccaniche SpA for the design, manufacture and supply of a thin slab casting unit used in the production of hot rolled coils (HRCs), claiming the latter has failed to fulfil its contractual obligations.
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In a filing with Bursa Malaysia yesterday, the steelmaker said its wholly-owned unit Southern HRC Sdn Bhd (SHRC) had terminated the agreement last Thursday. The thin slab casting unit was to be fed directly to a twin steckel mill for the production of HRCs.
The original agreement was inked on June 16, 2011. The amount involved in the contract is approximately RM427 million, said Southern Steel.
“SHRC has terminated the contract in accordance with the terms of the said contract. Danieli has failed to remedy and resolve the issues set out in the notice of termination, which constitutes a major default and failure by Danieli to fulfil its fundamental obligations under the contract,” it said.
Southern Steel added all disputes arising from such termination shall be settled by arbitration in accordance with the Rules of Arbitration of the International Chamber of Commerce in Singapore.
Meanwhile, the termination requires an assessment of the carrying value of the project.
“Pending the assessment, the company is unable to determine the extent of the financial impact, if any, at this juncture,” it said.
Southern Steel said the termination does not affect the other core businesses of the group.
Shares in Southern Steel rose three sen or 2.94% to settle at RM1.05 yesterday, with a market value of RM440.39 million
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