Thursday, Oct 05, 2006
MANAMA (Zawya Dow Jones)--Malaysian company DRB-Hicom Bhd Thursday confirmed it is winding down its loss-making waste management activities in Bahrain, which its Alam Flora Sdn Bhd unit was operating as a joint venture along with local partners.
The company said the cessation of its activities in the MBM-Alam Flora joint venture in Bahrain will have minimal impact on DRB-Hicom's results, as the bulk of the losses have already been accounted for in previous financial years.
DRB-Hicom said the decision is part of its "ongoing streamlining of business operations." However Bahrain business circles say the announcement follows difficulties between MBM-Alam Flora and municipal authorities in Bahrain.
As of June this year, MBM-Alam Flora had an accumulated loss of US$5.34 million, resulting in a negative net worth of US$2.33 million, DRB-Hicom said.
The Ministry of Municipalities and Agricultural Affairs suspended MBM-Alam Flora's waste disposal contract in June this year. The company then agreed to operate on an interim agreement for six months from July to December, pending the re-tender exercise for a new concession.
United Arab Emirates-based MBM Modern Building Maintenance Co and AA Hindi of Bahrain hold 48% and 4%, respectively, in MBM-Alam Flora.
DRB-Hicom has now said it won't provide any further capital injection to MBM-Alam Flora - in which its wholly-owned subsidiary Hicom Holdings has a 48% stake.
It is "no longer viable for the joint venture in Bahrain to continue operations," DRB-Hicom said.
DRB-Hicom said Hicom Holdings will not participate in the re-tender exercise but will remain a shareholder in MBM-Alam Flora until a suitable buyer is found.
MBM-Alam Flora was given a seven-year privatization contract in 2002 by the ministry to collect, transport and cleanse solid waste in the northern, central and southern municipalities of Bahrain.
Government officials were unavailable for comment.
-By M. Kashi, Dow Jones Newswires; +973 366 84 021; moira.varisun@yahoo.co.uk.
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10-05-06 1243ET
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