KUALA LUMPUR (Oct 22): Aizo Group Bhd (KL:AIZO) said its RM36.79 million sewage system upgrading subcontract in Terengganu will not proceed after the project owner cancelled the main contract awarded to its contractor.
In a filing with Bursa Malaysia on Thursday, Aizo said the contractor, Puncak Utara Sdn Bhd, had received a termination letter from the project owner, Lembaga Kemajuan Terengganu Tengah (Ketengah).
Puncak Utara subsequently notified Aizo of the termination, adding that it reserved its rights to pursue claims for losses against the company.
Aizo did not disclose the reason for the termination or the potential value of the claims.
Aizo said the financial impact on its net assets and earnings for the financial year ending June 30, 2027 (FY2027) would depend on the outcome of discussions with Puncak Utara and the final reconciliation of completed work and potential claims.
However, it said the termination would not affect its core operations, as the company continues to undertake other construction and energy projects.
Aizo, formerly known as Minetech Resources Bhd, secured the subcontract in Terengganu in July 2024 through its wholly-owned unit Aizo Engineering Sdn Bhd.
The project involved upgrading sewage systems and related infrastructure in Ketengah Jaya, Bukit Besi and Seri Bandi, with completion originally scheduled for June 23, 2027.
Separately, Aizo secured a RM9.09 million subcontract in July this year to undertake road and drainage works for a proposed transit-oriented development in Cheras, Kuala Lumpur.
Aizo shares closed unchanged at 35 sen on Thursday, valuing the company at RM75 million.