INTRODUCTION

Malaysia Marine and Heavy Engineering Holdings Berhad (“MHB” or “the Company”) wishes to announce that MHB’s wholly-owned subsidiary, Malaysia Marine and Heavy Engineering Sdn Bhd (“MMHE”) is in receipt of a Notice of Arbitration dated 15 March 2021 from Boskalis Malaysia Sdn Bhd (“BMSB”) in relation to claims arising from Subcontract No. 3900006700 between MMHE and BMSB for the Transportation and Installation (T&I) Works for Topside Float Over for Bokor CCP Project (“Subcontract”).

THE DISPUTE

Pursuant to the Subcontract, BMSB, amongst others, was required to make available a vessel (“Vessel”) for the load out of the Topside based on an agreed schedule.

In the Notice of Arbitration, BMSB claims that there was a delay in the load out exercise onto the Vessel and that it had allegedly incurred demurrage and standby costs (“Alleged Costs”) between 21 April 2020 and 20 July 2020 (“Claim Period”) as a result of the delay.  

In the Notice of Arbitration, BMSB seeks from MMHE the Alleged Costs in the amount of USD11,954,475.00, together with interest and costs (collectively, “Claims”).

MMHE disputes the Claims and maintains that MMHE has fully observed the provisions of the Subcontract at all times. BMSB's Claims are not consistent with the Subcontract and/or in law. Further, the events and circumstances during the Claim Period were fully known to BMSB and there was no delay on MMHE’s part during the said Period that will entitle BMSB to any compensation.

EFFECT OF THE ARBITRATION

MMHE will vigorously defend the Claims. 

The financial impact of the Arbitration initiated by BMSB on MMHE is dependent on the outcome. The expected loss, if any, arising from this Arbitration is anticipated to be approximately USD11,954,475.00, together with interest and costs that may be awarded by the Arbitral Tribunal if BMSB proves its entitlement to the Claims. However, no operational impact is expected to arise from the Claims.

MHB will continuously update shareholders of any material impact to MHB Group’s business and financial results for the financial year ending 2021 as a result of this Arbitration.

This Announcement is dated7 April 2021.