KUALA LUMPUR (April 7): TAS Offshore Bhd plans to initiate a legal suit against QMS 1 Offshore Services Ltd (QOSL) after QOSL had terminated a RM45.81 million shipbuilding contract with TAS Offshore's wholly-owned subsidiary TA Ventures (L) Ltd.

In a filing with Bursa Malaysia today, TAS Offshore said TA Ventures had received a notice of termination via email on April 5 to end an US$11.7 million (RM45.81 million) contract for the construction of one unit of offshore construction vessel.

"TAS Offshore's position is that the purported notice of termination is not valid and the company intends to proceed with legal proceedings," the filing stated.

TAS Offshore said the contract delivery date was Dec 11, 2015, and the vessel was built by a China-based contract builder.

"The vessel was ready for delivery within the agreed time frame, but the buyer failed to provide relevant documents and certificates for further process, citing technical and quality issues which we strongly disagree," it added.

TAS Offshore said the termination of the contract is expected to impact its financial year 2016 (FY16) results but the extent of the impact cannot be ascertained at the moment, pending the outcome of the legal proceedings against QOSL.

However, the termination is not expected to have a major operational impact on TAS Offshore group.

Last month, TAS Offshore had also received a notice from QOSL to terminate contracts to build two units of anchor handling tug supply vessels.

TAS Offshore shares closed half a sen or 1.18% higher at 43 sen, with a market capitalisation of RM75.51 million.