Contractor putting centre under receivership
SINGAPORE’S largest data centre, owned by listed Japan Land, is at risk of being liquidated as its main contractor is putting the centre under receivership over delayed progress payments.
Jurong Data Centre Development (JDD) is unable to repay the debts mainly because a plan to bring in an investor has hit a snag.
ConnectedPlanet Holding, which agreed last November to acquire an 85 per cent stake in JDD from Japan Land for $45.5 million, has repeatedly delayed completion of the acquisition, which was scheduled to take place on Jan 28, Japan Land said yesterday.
ConnectedPlanet – a unit of global investment firm Elchemi Group – earlier gave an assurance that it has the capacity to raise a sum equal to JDD’s debt, plus any amounts that will become due and payable to the contractor, as well an additional $5 million for interim financing and contingencies.
Construction costs and other expenses for the data centre ran up to $250 million by the time it was completed in January and received a temporary occupancy permit (TOP).
Japan Land said that it wrote to ConnectedPlanet on March 17, saying that it ‘deems the investor’s continued failure to complete as a breach of the investment agreement’ and reserves all rights and remedies.
Group managing director Leow Tet Sin told BT that the company has been approached by other potential investors and is talking to them now, since it is no longer bound by the exclusivity clause. The group is also considering legal action against ConnectedPlanet.
Mr Leow also said that some $40 million owed to main contractor M+W Zander has been paid, and the outstanding sum amounts to $200 million.
M+W Zander has appointed two partners from Ernst & Young Solutions as receivers of the properties, assets and undertakings of JDD.
Japan Land said that it was told of the appointment in a letter from Ernst & Young Solutions on Tuesday. According to the letter, JDD and its officers no longer have any power to deal with or manage the assets.
‘The company is engaging in discussions with M+W Zander with a view to exploring all avenues and remedies to resolve the matter expeditiously, including, but not limited to, the lifting of the receivership,’ Japan Land said.
M+W Zander also issued an adjudication award to JDD – provided for under the Security of Payment Act of the Building and Construction Authority – for an outstanding progress payment due on Oct 27 last year.
Under the terms of the award, the adjudicated sum is $29.1 million, plus 5 per cent per annum interest from the due date until payment, and the share of adjudication costs of close to $5,000.
Source : Business Times – 25 Mar 2010
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