MARC today announced that the request for arbitration against WCT Holdings Berhad (WCT Holdings), filed by three companies over claims related to a Qatari project, has no immediate rating impact on WCT Holdings’ RM1.0 billion MTN Programme and RM1.5 billion Sukuk Murabahah Programme. The ratings remain at AA- and AA-IS respectively with a negative outlook.

On July 10, 2017, WCT Holdings announced that Trans Gulf International Electro-Mechanical WLL, Powermech Engineering WLL and Trans Gulf International Electro-Mechanical WLL-Powermech Engineering WLL JV filed a request for arbitration with the Court of Arbitration of the International Chamber of Commerce against WCT Berhad, a wholly-owned subsidiary of WCT Holdings. The three companies are sub-contractors related to the Ministry of Interior head quarters project in Doha, Qatar and are claiming QAR181.6 million (RM214.1 million) for works under the sub-contract, legal costs, arbitration costs and other charges. WCT Holdings is taking legal steps to defend and oppose the arbitration claim.

MARC is of the view that the resolution of arbitration cases generally requires a significant amount of time. As such, the rating agency will continue to monitor the arbitration proceedings to evaluate their impact on WCT Holdings’ financials. A negative rating action on the MTN and Sukuk Murabahah is unlikely in the near term unless subsequent developments as a result of the arbitration proceedings lead MARC to believe that the outcome will have a material negative effect on WCT Holdings’ credit quality.

Contacts:
Wan Abdul Muiz Wan Abdul Ghafar, +603-2717 2939/ muiz@marc.com.my;
Yap Lai Ken, +603-2717 2947/ laiken@marc.com.my.