George Kent, MRCB in dispute over LRT3 funding

By SHAREN KAUR

  Will the progress of construction for the 37km Light Rail Transit Line 3 (LRT3) be affected following a dispute between George Kent (Malaysia) Bhd and Malaysian Resources Corp Bhd (MRCB) over financing requirements for the project?

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   If the LRT Line 3 is delayed as things are heating up between George Kent and MRCB, it would affect a lot of parties who are already involved in the project.

    George Kent had served a notice of arbitration on MRCB on Aug 13 following a dispute involving the JV company, MRCB George Kent Sdn Bhd.
   George Kent and MRCB signed the shareholders’ agreement (SHA) on June 8, 2015 to form the JV company on a 50:50 basis to tender for, undertake and complete the construction of the LRT line from Bandar Utama, Petaling Jaya to Johan Setia, Klang.
  The issued and paid-up share capital of the JV company stands at RM10 million, with George Kent Rail Sdn Bhd (wholly owned by George Kent) and MRCB Builders Sdn Bhd (wholly owned by MRCB) each holding a 50 per cent equity interest.
  The JV company was appointed by Prasarana Malaysia Bhd on Sept 4, 2015 as the project delivery partner for the LRT 3 project.

   However, a revised contract for the project was signed on Jan 25, 2019 by the JV company and Prasarana for a value of RM11.4 billion. This was following the government’s decision to change the structure of the LRT3 project to that of a fixed price contract.
  “George Kent and MRCB have a difference of opinion in the interpretation of certain provisions of the SHA with regard to the options for securing of the financing requirements for the JV company,” George Kent told Bursa Malaysia recently.

  “George Kent has in exercising its rights under the SHA referred the matter to arbitration to seek certain declarations as to the interpretation of those provisions,” it said.
  The group  added that no material operational impact is expected to arise from the arbitration.
  In a separate filing, MRCB confirmed that it had received the notice of arbitration from George Kent.

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