KUCHING: Ekovest Construction Sdn Bhd (ECSB) has claimed for general damages from Samling Resources Sdn Bhd (SRSB) for what it claimed as “wrongful termination” of the joint venture and shareholders agreement they have entered into in relation to jointly undertake the Pan Borneo Highway project.
The wholly-owned subsidiary of Ekovest Bhd (Ekovest) has served a notice of arbitration to commence arbitration proceedings against SRSB, Ekovest said in a filing with Bursa Malaysia.
On July 2, 2019, ECSB filed a Statement of Case in relation to the arbitration proceedings, and its claims on the arbitration proceedings is premised on the followings:
• wrongful termination of the joint venture and shareholders agreement (JVA) dated Jan 6,2017 entered into by ECSB and SRSB to jointly undertake the development and upgrading of the Pan Borneo Highway Phase 1 for work package contract WPC-02 (Sematan to Sg Moyan Bridge + KSR Interchange (project) ;
• misrepresentation by SRSB to ECSB in order to induce ECSB into performing SRSB’s tasks, duties and responsibilities prior to the submission of the tender, the procurement of the project from Lebuhraya Borneo Utara Sdn Bhd (LBUSB),the project delivery partner for the project, and the consequent management of the project and all its ensuing duties and tasks;
• failure to expeditiously and diligently make the necessary prior applications for the approvals from LBUSB for the sub-contract of the project to Samling-Ekovest JV Sdn Bhd,a special purpose vehicle incorporated by ECSB and SRSB to undertake the implemention of the project (JV company) and
• in the alternative,failure to take any steps to compel LUBSB to consent to the sub-contract of the works to the JV company, which should not have been unreasonably withheld.
ECSB claims for general damages, interest and costs to be determined by the arbitrator.
Ekovest said the arbitration commenced by ECSB is not expected to have any material impact on the earnings,net assets and gearings of Ekovest and its subsidiaries for the financial year ending June 30,2020.
“The arbitration is also not expected to have material operational impact on Ekovest group,” it added.
To recap, Ekovest had said in January 2017 that the contract value of the Pan Borneo Highway work package WPC-02 which ECSB and SRSB were to jointly undertake is worth about RM2.11 billion.
The package involves a stretch of 95.4km, construction of 22 bridges,93 bus shelters, six interchanges (Lundu,Bau, Mile 41/2,6,7 and 10 Penrissen Road) and nine pedestrian bridges.
According to Ekovest, immediately upon the incorporation of the JV company (Samling-Ekovest JV Sdn Bhd),SRSB shall sub-contract the project in its entirety on a back to back basis to the JV company at the same price at which the project was awarded to SRSB (with the approval of Lebuhraya Borneo Utara Sdn Bhd if required) in order for the JV company to carry out the project as per the JVA.
Upon the execution of the JVA, the JV company shall be incorporated and shall have an authorised share capital of RM1 million divided into one million ordinary shares of RM1 each.