SINGAPORE – Catalist-listed Koh Brothers Eco Engineering on Aug 18 disclosed three major legal disputes exposing it to nearly $57.6 million in potential liabilities.
This came just hours before shareholders convene to vote on moving the company to the Singapore Exchange mainboard.
The engineering and construction company flagged a maximum exposure of $20.5 million in a joint venture (JV) dispute, alongside a $23.3 million consortium arbitration and a subcontractor claim of up to $13.78 million.
The most pressing development involves the JV counterclaim. The company said the Singapore High Court on Aug 6 dismissed applications by its subsidiary, Koh Brothers Building & Civil Engineering Contractor (KBCE), to set aside partial arbitration awards. The JV partner then applied to the tribunal for final payment orders on Aug 7.
While Koh Brothers estimated its maximum exposure regarding these counterclaims at S$20.5 million, it noted that the JV account still holds more than S$40 million in undistributed funds.
In its first public disclosure of a separate dispute, Koh Brothers revealed that consortium partners are seeking about $23.3 million over KBCE’s alleged failure to pay its share of capital injections. A hearing for the dispute has been postponed to an unconfirmed date.
Subcontractor sues
KBCE and Koh Keng Siang, Koh Brothers non-executive and non-independent chairman, are also facing a lawsuit from a former subcontractor seeking between $9.18 million and $13.78 million for alleged wrongful termination and conspiracy. The parties have agreed to attend a mediation session.
Koh Brothers intends to file a counterclaim against the subcontractor and stated it has not made financial provisions for the suit at this time.
Despite the mounting legal proceedings, the company said the disputes do not cast significant doubt on its ability to continue as a going concern. It cited a net asset position of $124.7 million as at June 30, and expects that the consortium and subcontractor disputes will not reach definitive conclusions within the next 12 months.
Koh Brothers previously stated that it would broaden its investor base and improve share liquidity, having received in-principal approval from the bourse operator on July 1.
Shares of Koh Brothers Eco Engineering fell 2.6 per cent, or $0.003, to close at $0.114 on Aug 17. THE BUSINESS TIMES
