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

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

This came just hours before shareholders convene to vote on 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 and 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 attend a mediation session.

Koh Brothers intends to file a counterclaim against the subcontractor and stated 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 ability to continue 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.

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Koh Brothers Eco Engineering gets in-principle approval to move to SGX mainboard

Koh Brothers Eco Engineering proposes transfer to SGX mainboard

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.

Shares of Koh Brothers Eco Engineering fell 2.6 per cent or S$0.003 to close at S$0.114 on Monday.