Sime Darby unit ordered to pay MMHE damages over fabrication yards dispute

PETALING JAYA: Sime Darby Bhd's indirect wholly-owned subsidiary Sime Darby Engineering Sdn Bhd (SDE) has been ordered to pay Malaysia Marine and Heavy Engineering Sdn Bhd (MMHE) damages for claims involving the sale of two fabrication yards
The amount, however, was not disclosed.
The dispute is related to the sale and purchase agreement dated Aug 25, 2011 and the supplemental sale and purchase agreement dated March 30, 2012, both entered by MMHE and SDE for the disposal of SDE's oil and gas business to MMHE.
SDE had on March 19, 2018 received a notification from the Asian International Arbitration Centre dated March 16, 2018 that the Arbitral Tribunal had issued its award on March 13, 2018.
"SDE is in the process of reviewing the (tribunal) award," Sime Darby said in a stock exchange filing, noting that the award is not expected to have a material effect on the group's earnings and net assets for the financial year ending June 30, 2018.
Sime Darby said it will make further announcements on any material development on this matter from time to time.
Recall that on May 27, 2011, SDE had signed a memorandum of understanding with Petroliam Nasional Bhd (Petronas) and MMHE over the sale of the Teluk Ramunia fabrication yard to Petronas for RM296 million and Pasir Gudang fabrication yard to MMHE for RM399 million.
The disposal prices would be settled in cash and subject to change depending on the outcome of the due diligence to be performed on the assets.
Sime Darby had planned to use the proceeds for working capital purposes, adding that the disposal of the yards were in line with the new strategic direction adopted by the board and management of Sime Darby following the completion of the portfolio review exercise of the company and its subsidiaries.
Sime Darby’s share price went up 4 sen or 1.6% to close at RM2.59 today, while MMHE slipped half a sen or 0.7% to 75 sen.