Southern Steel terminates contract with Danieli

PETALING JAYA: Southern Steel Bhd’s (SSB) wholly owned subsidiary Southern HRC Sdn Bhd (SHRC) terminated a contract signed with Danieli & C. Officine Meccaniche SpA last Thursday.
The contract, signed on June 16, 2011, is for the design, manufacture and supply of a “Thin Slab Casting Unit feeding directly a twin Steckel Mill” for the production of hot rolled coil.
“Danieli has failed to remedy and resolve the issues set out in the notice of termination which constitute a major default and failure by Danieli to fulfill its fundamental obligations under the contract,” Southern Steel said in its filing with Bursa Malaysia yesterday.
“Arising from such termination, SHRC reserves all of its rights to exercise all remedies available to SHRC under the contract and at law as a result of Danieli’s misrepresentations, breaches and/or defaults under the contract,” it added.
It said that any and all disputes arising from the termination will be settled by arbitration in accordance with the Rules of Arbitration of the International Chamber of Commerce in Singapore.
“The amount involved in the contract is approximately RM427 million. This termination requires an assessment of the carrying value of the project. Pending the assessment, the company is unable to determine the extent of the financial impact, if any, on SSB Group at this juncture,” SSB said.
It does not expect the termination of the contract to affect the other core businesses of SSB Group.