The Board of Directors of SDHB wishes to announce that Serba Dinamik Sdn Bhd (In Liquidation) (“SDSB”), an indirect wholly owned subsidiary of SDHB, had on 22 June 2023, been served with the following:

i. Cekap Air Sdn Bhd’s (“CASB”) Originating Summons dated 19 June 2023;

ii. CASB’s Affidavit in Support dated 19 June 2023;

iii. CASB’s Notice of Application (Ex-Parte) dated 19 June 2023; and

iv. Konsortium KAJV Sdn Bhd’s (“KAJV”) affidavit dated 22 June 2023 (served on 23 June 2023).

The background to the ongoing proceedings is as follows:

i. The State Government of Terengganu awarded a project to KAJV to design and build 120 MLD conventional and 28 MLD membrane water treatment plants, intakes, service tanks, installation of raw water and clean water pipes, retrofitting and other works for the Kuala Terengganu Utara Water Supply Scheme.

ii. KAJV engaged CASB as its contractor to carry out the work in relation to the “Engineering, Procurement, Construction and Commissioning Contract for the Design and Build of 28 MLD Membrane Water Treatment Plants, Retrofitting and Other Works for Kuala Terengganu Utara Water Supply Scheme” (“Project”), by way of a letter of award dated 8 June 2016 (“LOA”).

iii. Subsequently, by a letter dated 13 February 2017, KAJV informed CASB that KAJV shall novate the terms and conditions in the LOA to SDSB ("Novation Letter").

iv. Following the Novation Letter, vide a subcontract dated 2 July 2018 (“Subcontract”), SDSB engaged CASB as its sub-contractor to carry out the Project works.

v. Pursuant to the Subcontract, SDSB issued several Interim Payment Certificates with backcharges deduction for materials/equipment made by SDSB on behalf of CASB.

vi. SDSB and CASB also executed a Supplemental Agreement to allow SDSB to charge 10% profit margin on the payments made by SDSB on behalf of CASB.

vii. It was agreed by CASB’s Managing Director that the total amount paid by SDSB to CASB and/or its vendors was RM44,028,654.20, therefore the 10% profit margin agreed would be in the sum of RM4,402,865.42. As such, the total indebtedness by CASB to SDSB was RM48,431,519.62.

viii. Around early 2022, KAJV, SDSB and CASB had discussions and agreed for SDSB to novate the Subcontract to KAJV on the following arrangement:

      a. Instead of CASB being paid directly by SDSB, KAJV pays a sum of RM116,750,107.39 to CASB as assigned by SDSB based on the notice of assignment dated 10 February 2022;

      b. The final account records an overpayment of RM48,790,711.21 owed by CASB to SDSB, comprising of:

1. RM44,028,654.20 being backcharges;
2. RM4,402,865.42 being the 10% profit margin; and
3. RM359,191.59 being variation works omitted from the contract.

ix. In recognition of the overpayment by SDSB, CASB made total part payments of RM10,402,865.42 to SDSB from April 2022 to September 2022, leaving a balance of RM38,387,845.79 due and owed by CASB to SDSB.

x. Despite numerous demands made, CASB did not make any payments to SDSB to settle the outstanding debt.

xi. On 7 June 2023, SDSB, through its solicitors, issued a statutory notice of demand pursuant to sections 465(1)(e) and 466(1)(a) of the Companies Act 2016 to CASB for the sum of RM38,387,845.79.

xii. On 19 June 2023, CASB filed the originating summons to apply for a Fortuna Injunction to restrain SDSB from presenting a winding up petition against CASB, alleging, amongst others, that the debt is disputed.

Affidavits have been exchanged and submissions have been filed. CASB’s Fortuna Injunction application was heard on 26 July 2023 and the Court fixed 27 September 2023 for clarification and decision.

On 10 January 2023, SDSB was wound up and Victor Saw Seng Kee was appointed as the Liquidator of SDSB by an order of the High Court of Malaya. As SDSB is in liquidation, an assessment will need to be made on the impact on SDSB.

SDSB is currently defending the present proceedings against CASB’s Fortuna Injunction application.

SDHB will make further announcements as and when there are material developments on the matter.

This announcement is dated 20 September 2023.