Koh Brothers Eco Engineering faces up to S$57.6 million in potential legal liabilities

[SINGAPORE] Catalist-listed Koh Brothers Eco Engineering on Tuesday (Aug 18) disclosed three major legal disputes which are exposing it to nearly S$57.6 million in potential liabilities.

This came just hours before an extraordinary general meeting at which shareholders voted in favour of moving the company to the Singapore Exchange mainboard.

The engineering and construction company flagged a maximum exposure of S$20.5 million in a joint-venture (JV) dispute, alongside a S$23.3 million consortium arbitration and a subcontractor claim of up to S$13.78 million.

The most pressing development involves the JV counterclaim.

The company said the Singapore High Court on Aug 6 dismissed applications by its subsidiary, Koh Brothers Building & Civil Engineering Contractor (KBCE), to set aside partial arbitration awards.

The JV partner then applied to the tribunal for final payment orders on Aug 7.

While Koh Brothers estimated its maximum exposure regarding these counterclaims at S$20.5 million, it noted that the JV account still holds more than S$40 million in undistributed funds.

In its first public disclosure of a separate dispute, Koh Brothers revealed that consortium partners are seeking about S$23.3 million over KBCE’s alleged failure to pay its share of capital injections. A hearing for the dispute has been postponed to an unconfirmed date.

Subcontractor sues

KBCE and Koh Keng Siang, Koh Brothers’ non-executive, non-independent chairman, are also facing a lawsuit from a former subcontractor seeking between S$9.18 million and S$13.78 million for alleged wrongful termination and conspiracy. The parties have agreed to undergo mediation.

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Koh Brothers intends to file a counterclaim against the subcontractor and stated that it has not made financial provisions for the suit at this time.

Despite the legal proceedings, the company said the disputes do not cast significant doubt on its viability as a going concern. It cited a net asset position of S$124.7 million as at Jun 30, and expects that the consortium and subcontractor disputes will not reach definitive conclusions within the next 12 months.

Koh Brothers Eco Engineering received in-principal approval from the bourse operator on Jul 1 to transfer its listing to the mainboard. The company previously stated that the proposed move would broaden its investor base and improve share liquidity.

In the red for H1

The group recorded a loss of S$5.7 million for the first half ended Jun 30, reversing from a S$3 million profit in H1 2025.

This was attributed to a 39 per cent increase in cost of sales stemming from higher material and procurement costs incurred by the engineering and construction division, in light of ongoing geopolitical conflicts and supply-chain disruptions.

As at Jun 30, the group’s order book amounted to S$1 billion, it said on Aug 5. Cash and bank balances remained “healthy” at US$61.3 million; shareholders’ equity stood at S$114 million.

“We remain focused on disciplined project execution, operational excellence and prudent cost management for our ongoing projects,” said Koh Brothers chief executive Paul Shin.

These include the design and construction of a proposed multi-storey bus depot in Lorong Halus, piling and ground improvement-related works for a Toa Payoh integrated development, the Tuas Water Reclamation Plant and a joint-venture contract for Changi Terminal 5’s intra-terminal tunnels.

In April, Koh Brothers also turned down an attempt by shareholders to force the company to distribute its stake in Oiltek, saying it is not in the best interests of the group to do so.

The shares of Koh Brothers Eco Engineering fell 9.6 per cent or S$0.011 to close at S$0.103 on Tuesday.