EMS Energy returns Tuas South premises to JTC

The construction of its waterfront facility was halted in 2016.

Offshore and marine engineering company EMS Energy has returned the premises it leased at Tuas South Street 15 to JTC Corporation to avoid additional rental charges on top of a rental arrear amounting to $941,253.87, a filing with the Singapore Exchange (SGX) revealed.

The firm had entered into a tenancy agreement with JTC for the lease of the premises in February 2014 for 16 years and eight months starting from May 2014. Since the entry into the agreement, EMS Energy proceeded with the construction of a waterfront facility worth $10.75m. However, construction was halted in 2016 and no activities occurred on the premise since then.

A separate filing with the local bourse revealed that EMS Energy received a letter of demand from JTC for the repayment of rental arrears. EMS Energy was also informed that legal proceedings against the firm may be commenced for non-repayment of the arrears, and that the Tuas South premises may be repossessed. An earlier letter from JTC also reminded EMS Energy to fulfill the investment criteria in the lease agreement with JTC.

However, EMS Energy was not able to fulfill the investment criteria despite talks with various parties for joint development of the premises, which it noted was due to the restrictions imposed by JTC’s lease as well as the balance tenure.

“The company has no future plans requiring the premises,” EMS Energy said, adding that the lease was terminated and the premise vacated on 6 June. It is in negotiations for a repayment scheme on the rental arrears with JTC, as well as other charges such as damages, reinstatement works and property tax.

The firm noted that the cost of construction relating to the premises, as well as the return of the site to JTC, will have a material impact on the net tangible assets and earnings per share (EPS) of the group for the financial year ending December 2019.