Darco Terminates $79m Deal
Unacceptable delays in its project in Taiwan under a build-operate-transfer arrangement has led to Darco Water Technologies’ decision to begin civil proceedings to terminate the $79 million contract. Darco is seeking compensation and damages for failure on the Taoyuan County government’s part in honouring its contractual obligations. The Taoyuan County government had earlier in March 2010, awarded Darco a project to build and operate a wastewater treatment plant for a concessionary period of 35 years. Issues such as failure to hand over a piece of land for the construction as scheduled and polluted area amounting to 80 percent of the land area handed over by the Taoyuan County government started to surface following the signing. To-date, Darco said that the site has not been cleared for construction to begin. The project was expected to bring in estimated revenue of $298 million over the concessionary period.
Significance: With the Taoyuan County government likely to contest Darco’s claims, the legal process is going to be a long drawn out affair. The financial impact is that potentially the company may record the loss of the entire investment.
Technics Rises On Private Placement
Shares of Technics Oil & Gas began trading $0.015 or 1.5 percent higher after the company announced that a placement of 10.7 million new shares in its share capital will be issued to Eversendai Corporation. Malaysian-listed Eversendai, which holds a 13.9 percent stake in Technics, is a substantial stakeholder of Technics. The placement shares represents 5 percent of Technics’ share capital and 4.8 percent of the enlarged share capital. At $1.05 per placement share, the leading full service integrator of compression systems and process modules will raise $11.2 million in net proceeds. Technics will utilise the net proceeds for the repayment of its bank borrowings. The placement will also enable Technics to augment its working capital to enable it to undertake its projects moving forward.
Significance: Apart from the support shown by Eversendai, Technics believes that it is able to leverage on the strengths of Eversendai by tapping its network of companies and contacts for business expansion.
Hu An Cable Sets Up Singapore Subsidiary
Mainboard-listed Hu An Cable Holdings established a wholly-owned subsidiary in Singapore. Named Hu An Electric (Singapore), the new unit will mainly be engaged in the manufacture and sales of wires and cables to the high-growth markets in Southeast Asia, Central Asia, South America, Africa and Middle East. Hu An Cable has injected US$1.3 million for the startup and rental of a workshop at The Splendour. The Chinese wire and cable manufacturer said that the incorporation of its sales team in Singapore would help the company develop a two-pronged growth engine from both the domestic and overseas markets. Hu An Cable expects higher profitability from the sales of high value-added cables like oil and gas cables, rubber and mining cables, mineral-insulated copper-clad cables and medium/high/ultra high voltage cables.
Significance: Commenting further on the startup, chairman of Hu An Cable, Dai Zhixiang, said “The overseas markets are attractive to China’s domestic players due to the growing demand for infrastructure investment and sustainable energy supply in those high-growth economies.”