KUALA LUMPUR (June 11): E.A. Technique (M) Bhd said it has received a payment claim of US$6.10 million (RM25.4 million) from Malaysia Marine Heavy Engineering Sdn Bhd (MMHE), over disputes of an alleged non-payment of additional works done by the latter.

The company plans to contest the matter and noted that the payment claim is expected to have a financial impact of approximately RM25.48 million to the company, by reducing its future profit and cash flow position.

To put things in perspective, E.A Technique posted a net profit of RM74.23 million in last financial year ended Dec 31, 2018 (FY18). The payment claim which comes in the tune of RM25 million would be equivalent to one third of its last year’s profit. 

In an exchange filing today, the company said the claim is in relation to disputes over the alleged non-payment of additional works done by MMHE and the invoices purportedly issued by MMHE under the conversion contract signed in June 2015.

In February 2015, E.A. Technique signed an engineering, procurement, construction, installation and commissioning (EPCIC) contract with HESS Exploration & Production Malaysia B.V., for the engineering, procurement, construction, installation and commissioning of a floating storage and offloading facility.

The facility was to be deployed in the full field development project in the North Malay Basin, located about 150 km North East off the shore of Kota Bharu in the state of Kelantan.

MMHE came into the picture in June 2015, when it was appointed as sub-contractor for the project.

“The payment claim is not expected to have any potential business or operational impact on the company.

“At this juncture, the company has not made any provision in the accounts, as the company is seeking advice and consultation from its solicitor to contest the matter,” E.A. Technique said.

To recap, in October last year, MMHE filed a payment claim of US$30.22 million (RM125.41 million) against EA Technique (M) Bhd.

The two came into loggerheads amid a contract to convert a vessel into a floating storage and offloading (FSO) facility, which the two companies inked in 2015. Later, disputes arose relating to change orders (variations) under the conversion agreement. An attempt to reach a settlement failed on June 22 this year. 

Shares of E.A. Technique closed half a sen lower at 44.5 sen apiece today, bringing a market capitalisation of RM224.28 million.