KUALA LUMPUR (Aug 14): Iris Corp Bhd said the Ministry of Home Affairs had cancelled its contract for the National Integrated Immigration System (NIISe), with immediate effect.
In a bourse filing, it said its wholly owned Iris Information Technology Systems Sdn Bhd (IITS), the appointed developer of the new immigration system which Iris is in the midst of selling an 80% stake in, on Monday (Aug 14) received a notice of termination dated Aug 10 from the ministry.
"IITS is seeking legal advice from its solicitors in relation to the notice of termination, and shall take the necessary actions to protect its interests and exercise its legal rights in relation to the NIISe contract.
"The termination of the NIISe contract is expected to have an impact on the group’s financial performance for the financial year ending March 31, 2024. However, the extent of the impact cannot be reliably ascertained at this juncture," said Iris.
The identity products and solutions provider said that it will make the necessary announcements, including the financial and operational impact arising from the termination, once there is further development upon obtaining legal advice from its solicitors.
On May 24, KDN extended the NIISe contract to IITS by 12 months from Sept 1, 2025, to Aug 31, 2026. The contract worth RM1.16 billion was first awarded to IITS in January 2021, for a period of 54 months commencing from March 1, 2021 until Aug 31, 2025.
On the same day KDN awarded the contract to IITS, Home Minister Datuk Seri Saifuddin Nasution Ismail said that there was a possibility of replacing IITS as contractor of NIISe if the company is unable to implement the project.
Before the contract renewal, Saifuddin said that the project had not achieved adequate progress as at March 2023.
The termination will likely jeopardise Iris' 80% stake disposal in IITS for RM70 million cash, which it had in February inked a share sale agreement with information technology company Tass Tech Technologies Sdn Bhd (TTTSB) for.
TTTSB is wholly owned by Tass Tech (M) Sdn Bhd, which is 70% owned by Shukor Ahmed and 30% by Raja Muhammad Badiuzzaman Raja Chulan, according to the Companies Commission Malaysia.
Following a RM7 million deposit paid, the disposal was at first expected to be completed in August 2023, with the second (RM41.13 million) tranche paid by TTTSB in May, and the third tranche (RM21.87 million) paid by August. But TTTSB twice requested to defer the payment of the second and third tranches — the first time it sought an extension of three months each, and second by six months each — which resulted in the second tranche's payment date now deferred to Feb 29, 2024, while the third tranche payment is delayed to May 31, 2024.
Iris agreed to TTTSB's request, based on an interest rate of 5% per annum, calculated daily from the day after the respective original payment due dates.
Iris had said the stake disposal would enable the group to unlock its value of investment in IITS and would contribute positively to its cash flow.
The group's shares closed unchanged at 8.5 sen on Monday, with a market capitalisation of RM261.94 million. The stock has declined 39.29% year-to-date.
To receive CEO Morning Brief please click here.