KUALA LUMPUR: Wah Seong Corporation Bhd, whose share price surged to RM1.36 – the highest since May 2015 – on Wednesday, announced after market close that it would pay £500,000 (RM2.73mil) to settle a claim with Bauhuis B.V.
It announced that its indirect unit Wasco Coatings HK Ltd (WCHKL) had on Dec 30, 2017 entered into a settlement agreement with Bauhuis by paying the amount as full and final settlement of the claims to the latter.
The settlement was related to a Sept 2, 2015 contract for the supply of pipe-coating equipment to be installed and commissioned by Bauhuis at a pipe-manufacturing plant in Regina, Canada.
Wah Seong said upon the execution of the settlement and the receipt of the settlement sum, Bauhuis shall suspend the suspend the arbitration proceedings under the London Court of International Arbitration against WCHKL.
WCHKL will also not initiate a counter-claim against Bauhuis following a legal review of its position.
Pursuant to the request for arbitration, Bauhuis estimated its claims in the arbitration to be 3.90mil euros resulting from monies outstanding under the Sept 2, 2015 contract.
The contract was for the supply of pipe-coating equipment to be installed and commissioned by Bauhuis at a pipe manufacturing plant in Regina, Canada.
On Nov 8 last year, Wah Seong explained that Bauhuis was engaged to carry out the design, procurement, fabrication, installation and commissioning of a FBE-ARO-CACC & Internal Flow coating plant for WCHKL to be leased to Evraz Wasco Pipe
Protection Corporation.
Evraz Wasco is a 49% joint venture owned by Wasco Coatings Ltd which provides pipe coating services to the North American market.
Wah Seong had claimed Bauhuis delayed in the delivery of the equipment or obtaining the Canadian Standards Association (CSA) approval for such equipment and some of it required modification as it did not meet the specifications under the Sept 2, 2015 contract.
It had also claimed not all of the equipment was delivered by Bauhuis to WCHKL and some of the equipment was also defective or not fit for its purpose or which failed certain CSA approval process.
This has resulted in WCHKL incurring additional cost, suffered losses and also delayed the start-up of the EWPPC’s pipe coating operations.
As a result, a dispute arose between WCHKL and Bauhuis as to whether (if any) amount is payable by WCHKL under the contract to Bauhuis in light of the various breaches of the contract by Bauhuis.
Wah Seong said it then claiming interest charges on top of the 3.90mil euros up to the date of the request for arbitration.
“There will be no material operational impact of the arbitration on WCHKL and the WSC group. The arbitration does have a financial impact on WCHKL as WCHKL estimates its potential counter-claim against Bauhuis to be US$20.57mil by
reason of Bauhuis’ non-performances and breaches of its contractual obligations under the abovementioned contract,” it had then said.
Meanwhile, a filing with Bursa Malaysia showed the Employees Provident Fund had ceased to be a sunstantial shareholder after it disposed of 2.74 million shares on Dec 29.
Wah Seong closed up 22 sen to RM1.31.
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