KUALA LUMPUR (Oct 2): Malaysia Marine and Heavy Engineering Holdings Bhd (MHB) said today it will rigorously defend the claims made by EA Technique (M) Bhd, which is seeking US$21.74 million (RM90 million) over a dispute concerning a contract to convert a vessel into a floating storage and offloading (FSO) facility.

Yesterday, EA Technique announced it had commenced arbitration against MHB's wholly-owned subsidiary Malaysia Marine and Heavy Engineering Sdn Bhd (MMHE).

In a filing with Bursa Malaysia today, MHB said it will make counter claims for the additional work orders (AWOs) issued to EA Technique and the costs incurred as a result of the extension of time.

"Apart from the arbitration proceeding, MMHE reserves its right to pursue any other legal actions as may be permitted under the Malaysian laws," it added.

EA Technique's claims against MMHE include the recovery of overpayment of US$8.73 million in respect of the price of the conversion contract, a US$4.01 million claim on the back charges under the contract, and the recovery of US$9 million paid to MMHE pursuant to the letter of undertaking due to unsubstantiated change orders.

This followed a failed attempt between the two companies to reach a settlement on June 22, paving the way for them to proceed with legal proceedings.

MHB said it will update stakeholders on any material impact to the group's business and financial results for the financial year ending Dec 31, 2018.

On June 9, 2015, EA Technique had appointed MMHE as the main contractor for the engineering, procurement, construction installation and commissioning contract with HESS Exploration & Production Malaysia BV for an FSO facility to be deployed in the full field project in the North Malay Basin, off Kota Baru, Kelantan.

"During the period of the contract, MMHE issued AWOs to EA Technique claiming payments for the work done. Disputes and differences have arisen between the parties in respect of the sum arrived under the invoices and the AWOs," said MHB.

MHB shares ended the morning session up 4 sen or 6.01% at 70.5 sen today, with 2.48 million shares done, bringing a market capitalisation of RM1.13 billion. EA Technique's share price was also 4 sen or 9.09% higher at 48 sen, with 11.38 million shares traded, for a market cap of RM241.92 million.