Despite the weak earnings, CIMB Research maintained its Hold call on Malakoff.
KUALA LUMPUR: Malakoff Bhd's 90% owned Tanjung Bin Power Sdn Bhd has signed an agreement to resolve the legal suit over its power plant which was affected by boiler tube failures and the inability to meet output conditions.
The independent power producer said on Friday that Tanjung Bin – which was then seeking RM780mil in December 2015 – had signed an agreement with the litigation respondents IHI Corporation Japan (IHI), Ishi Power Sdn Bhd (IPSP) and IHI Power Systems (M) Sdn Bhd (IPSM) and the arbitration respondents comprising Sumitomo Corporation, Zelan
Holdings (M) Sdn Bhd and Sumi-Power Malaysia Sdn Bhd.
The disputes between parties were the 22 boiler tube failure incidents at the power station consisting of three 700MW coal-fired units owned and operated by Tanjung Bin and the inability of the plant to meet certain required output conditions.
It said the parties agreed to resolve and settle the disputes in accordance with the terms and conditions of the agreement.
Following the agreement, it said a consent judgment will be entered in the litigation action on a strictly without admission of liability basis. Tanjung Bin as the claimant, will withdraw and discontinue the arbitration proceedings on the terms and conditions set out in the agreement.
“The signing of the aforementioned agreement is expected to contribute positively to the earnings and net assets of Malakoff Group for the financial year ending Dec 31, 2017,” it said.
To recap, on Dec 1, 2015, Tanjung Bin announced it was seeking damages from IHI, IPSP and IPSM for breaches of the duty of care of which they individually and/or collectively owed to Tanjung Bin.
“The breaches have led to at least 22 different boiler tube failure incidents at the plant and the inability of the plant to meet certain required output conditions.
“The total claimed against defendants is presently estimated at approximately RM780mil. The claims against the separate defendants are however made under separate heads and the amounts claimed vary,” it had earier said.
Tanjung Bin had also sought relief from the court for loss and damage arising from the breaches from which includes the costs of repair and replacement, and economic losses including in relation to available capacity payments and daily utilisation payments as well as interest and costs.
IHI is the manufacturer and supplier of the equipment, parts and components for boilers and boiler system for the plant.
ISHI and IPSM provided services to the plant for, among other things, coal blending, maintenance and operations of the boilers and mills of the plant.
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