PECD expansion in Middle East region suffers setback

zoom

Cancellation: PECD Construction’s contract for the Movenpick Oceana Hotel on the Palm Jumeirah was terminated in July this year

Malaysian contractor PECD Construction has said that its planned joint venture with Dubai Investment Group (DIG) is unlikely to go ahead.

The two companies had originally announced a partnership - believed to be worth US $54 million (AED 198 million) - in June this year. The plan was for PECD to undertake construction and property development projects for DIG-owned companies, as well as for Dubai Properties.

But now the deal might not go ahead after PECD received a letter from DIG earlier this month informing the company of its intention to not proceed.

"We are still waiting on feedback from DIG as to the reasons why, but when we do, I think it will be a confirmation of withdrawal from the earlier proposed joint venture. But at this point we can't comment," said Azlan Aziz, corporate communications officer, PECD Malaysia.

In a statement to the Bursa Malaysia, PECD proposed to use the $5.9 million worth of proceeds originally earmarked for the subscription of the equity interests in the proposed joint venture for the working capital of the PECD Group instead.

DIG was unavailable for comment at the time of going to press.

The deal withdrawal will come as a further blow to PECD, whose contract on the Movenpick Oceana Hotel and apartment development on the Palm Jumeirah was terminated by the client, Seven Tides, in July this year. The company was awarded the contract in 2005, but the project has since been handed over to Dhabi Contracting.

"PECD came on board in 2005 and we terminated the contract in July," said a spokesperson from Seven Tides. "It was down to efficiency - the project should have been completed in December 2006 - but now we hope to finish by June next year."

According to Aziz, PECD is in the process of finalising its claims for work completed on the Movenpick job.

"We therefore can't comment on what the reasons behind it might have been," he said.

Both ventures were part of PECD's plan to increase its exposure in the UAE and Middle East.

Over the last few years, the company had secured around $250 million worth of projects in Dubai. Its first was the construction of the four Gate Precinct Buildings at Dubai International Financial Centre (DIFC), which was completed in August 2006.

Among its other projects in the emirate are the Al-Fattan commercial and residential towers at DIFC and the Movenpick Deira.

Print | Email | Discuss this article |

READERS' COMMENTS

View all comments (0)

Have your say

Click here to post a comment

Add your Comment All posts are sent to the administrator for review and are published only after approval. ArabianBusiness.com reserves the right to remove any comment at any time for any reason. Please keep your responses appropriate and on topic.
Name *
Remember me on this computer
Email *	(Your email address will not be published)
City
Country
Subject *
Comment *
Notify me of further comments
Security Code *
Please click post only once - your comment will not be published immediately.

MORE FROM ARABIANBUSINESS.COM