INTRODUCTION

Reference is made to the Malaysia Marine and Heavy Engineering Holdings Berhad (“MHB” or “the Company’s”) announcements dated 14 March 2019 and the material litigation update in the Note B8 of the Quarterly Results duly announced on 26 April 2019, 02 August 2019, 24 October 2019, 12 February 2020, 29 April 2020, 23 July 2020, 27 October 2020, 09 February 2021, 28 April 2021 and 30 July 2021.  

MHB Board of Directors wishes to announce that its wholly-owned and major subsidiary, Malaysia Marine and Heavy Engineering Sdn Bhd (“MMHE”) had on 3 August 2021 received via its solicitors Messrs Mohanadass Partnership the Final Award dated 23 July 2021 issued by the Arbitral Tribunal in respect of the arbitration proceedings initiated against MMHE by Kebabangan Petroleum Operating Company Sdn Bhd (“KPOC”).

THE DISPUTE

The Kebabangan ("KBB") Field is located about 135km NW of Kimanis, Sabah.  The KBB Platform was developed as a hub for the development of deepwater oil and gas assets in the North Sabah area.

MMHE was to carry out and complete certain works for KPOC, including to construct, engineer, procure, fabricate, inspect, test & pre-commission, load-out and sea-fastening of the KBB Topsides and associated appurtenances (“Contract”). 

The works were completed in June 2014.

KPOC, in its Notice of Arbitration dated 13 March 2019, claims that MMHE was and is in breach of the express and/or implied terms of the Contract in respect of the supply of certain valves.

KPOC has included an indicative amount of its alleged loss as part of the Notice of Arbitration, at approximately RM125.1 million, and has claimed that it continues to allegedly suffer losses. KPOC subsequently, as part of its Closing Submissions dated 9 March 2021, identified its claim amount as RM58.9 million.

THE FINAL AWARD

MHB wishes to announce that  the Arbitral Tribunal has, in the Final Award, dismissed all of KPOC’s claim for loss of revenue in the sum of RM28,030,905.80.

However, the Arbitral Tribunal has also ordered that MMHE shall pay KPOC the following:-

(a) The sum of RM17,241,178.02 as damages for the costs expenses incurred by KPOC for assessment, procurement and replacement of valves in the period of 2016 to 2019, together with interest at the rate of 5% per annum from 11 October 2019 to the day of payment;

(b) The sum of RM9,820,770.00 as damages suffered by KPOC in having to procure 1365 valves and install 1454 valves in the future, together with interest at the rate of 5% per annum from 11 October 2019 till the date of payment; and

(c) The sum of RM1,029,167.25 for its legal fees and expenses.

THE FINANCIAL AND OPERATIONAL IMPACT TO THE GROUP 

The Final Award will not have any impact on the operation of MMHE. The total financial impact arising from the Final Award would be RM28,091,115.27 being the total of amounts in paragraphs (a), (b) and (c) above including any interest imposed thereof.

NEXT STEPS

MMHE is advised that it has legal grounds to challenge the Final Award and is considering further action.

Further announcements will be made in respect of any material development thereof.

This announcement is dated 6 August 2021.