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MATERIAL LITIGATION TH HEAVY ENGINEERING BERHAD ("THHE" OR THE "COMPANY") - NOTICE OF ARBITRATION FROM CORAL INTOIL SDN. BHD.

TH HEAVY ENGINEERING BERHAD

Type Announcement
Subject MATERIAL LITIGATION
Description
TH HEAVY ENGINEERING BERHAD ("THHE" OR THE "COMPANY")
- NOTICE OF ARBITRATION FROM CORAL INTOIL SDN. BHD.

The Board of Directors of THHE wishes to inform that THHE had on 23 July 2021 received a Notice of Arbitration dated 23 July 2021 (“Notice of Arbitration”) from Coral Intoil Sdn. Bhd. (“CISB”) to commence arbitration proceeding against THHE. The details of the Notice of Arbitration are as follows:-

1. Date of Service of the Notice of Arbitration 

The Notice of Arbitration was served on 23 July 2021.

2. Details of circumstances leading to the serving of the Notice of Arbitration

Pursuant to a Joint Venture Agreement dated 10.9.2013 ("JV Agreement"), both THHE and CISB had agreed to cooperate with each other in a joint venture to carry out hook-up & commissioning projects ("HUC Projects") wherein both parties have agreed to formalise the arrangement so that both parties can jointly bid under THHE Offshore Services Sdn. Bhd. ("JV Company") and undertake hook-up and commissioning jobs under the JV Company.

CISB alleges among others, that THHE had failed to provide the required funding to the JV Company pursuant to the express terms of the JV Agreement. CISB also claims that THHE owes CISB the amount outstanding under the KINABALU HUC Project and PERMAS HUC Project.

Clause 32 of the JV Agreement is invoked by CISB to refer the dispute to arbitration.

3. Particulars of Claim

CISB is claiming from THHE the following reliefs:-

(a) General damages as the result of breach of term of the JV Agreement for KINABALU HUC Project in the amount RM3,200,000.00;

(b) Special damages and general damages as the result of breach of term of the JV Agreement for PERMAS HUC Project in the amount of RM12,636,300.00;

(c) Liquidated damages on the PERMAS HUC Project commencing from 1 February 2015 to date 16 April 2021 amounting to RM7,713,336.00;

(d) Interest on the awarded sum for PERMAS HUC Project at the rate of 10% per annum commencing from date of award until date of full settlement; and

(e) Interest on the awarded sum for KINABALU HUC Project at the rate of 10% per annum commencing from date of award until date of full settlement.

4. The financial and operational impact of the Notice of Arbitration on the Group

As of the date of this announcement, there is no material financial or operational impact to the Group.

5. Expected losses, if any, arising from the Notice of Arbitration

THHE does not expect to incur any losses arising from the Arbitration save for legal fees and arbitration costs.

THHE is of the view that CISB’s claim as per the Notice of Arbitration is baseless as the JV Company has been wound up on 9 April 2018.  Furthermore, the KINABALU HUC and PERMAS HUC projects were not awarded to THHE, but to its wholly owned subsidiary, THHE Fabricators Sdn. Bhd. THHE is currently seeking legal advice on the matter.

The Company will make further announcement on the material developments of the above matter from time to time.

This announcement is dated 27 July 2021.





Announcement Info

Company Name TH HEAVY ENGINEERING BERHAD
Stock Name THHEAVY
Date Announced 27 Jul 2021
Category General Announcement for PLC
Reference Number GA1-26072021-00107