INTRODUCTION

Reference is made to the Malaysia Marine and Heavy Engineering Holdings Berhad (“MHB” or “the Company’s”) announcement dated 7 April 2021 and the material litigation updates in the Note B8 of the Quarterly Results duly announced on 30 July 2021 and 2 November 2021.

Pertaining to the Notice of Arbitration dated 15 March 2021 instituted by Boskalis Malaysia Sdn Bhd (“BMSB”) in relation to claims arising from Subcontract No. 3900006700 BMSB entered with the Company’s wholly-owned and major subsidiary, Malaysia Marine and Heavy Engineering Sdn Bhd (“MMHE”) for the Transportation and Installation (T&I) Works for Topside Float Over for Bokor CPP Project (“Subcontract”); MHB wishes to announce that BMSB has agreed to discontinue the arbitration proceedings in consideration of MMHE paying an agreed sum as full and final settlement of claims identified by BMSB in the said Notice of Arbitration.

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 as a result of the delay.  

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.

Following the settlement reached between BMSB and MMHE, on 26 August 2021, BMSB notified the Arbitral Tribunal that BMSB has agreed to discontinue the arbitration proceedings against MMHE without liberty to file afresh and requested for the necessary orders to be issued. By an Order dated 15 November 2021 (which was received by MHB on 16 November 2021), the Arbitral Tribunal formally issued the requested order recording the termination of the arbitration proceedings.

THE FINANCIAL AND OPERATIONAL IMPACT TO THE GROUP 

MHB Board of Directors is of the view that the settlement is in the best interests of MMHE and the Group and will not have any material impact on the financial position and operations of MMHE.

This announcement is dated 17 November 2021.