KUALA LUMPUR (July 24): TH Heavy Engineering Bhd (THHE) has been ordered by the High Court here to pay US$63.42 million (RM288.72 million) to its joint venture partner Global Mariner Offshore Services, for damages Global Mariner claimed it suffered as a result of THHE's refusal to honour a shareholders agreement between them to transfer its 80% stake in Floatech (L) Ltd to Global Mariner, following THHE's default of its loans.

Global Mariner holds the remaining 20% in Floatech — a Labuan-based company that owns and leases floating, production, storage and offloading (FPSO) vessels to upstream oil and gas companies.

THHE, the 66.45%-owned unit of Urusharta Jamaah Sdn Bhd (UJSB) that was delisted in September last year, was also ordered to pay RM1.9 million as costs, including RM800,000 to Global Mariner.

UJSB is a Ministry of Finance special-purpose vehicle that took over Tabung Haji's shareholding in THHE in 2018, together with more than 100 listed companies that the pilgrim fund had invested in but whose shares underperformed. The move was part of an initiative to rehabilitate the fund, as its investments deteriorated to the point it was illegal for the pilgrim fund to continue to pay dividends to its contributors.

The verdict was delivered last Friday (July 21) by judge Adlin Abdul Majid, who allowed Global Mariner’s claim against THHE.

She also dismissed THHE’s counterclaim that its financial position was made worse by Global Mariner's failure to carry out its obligations as a shareholder in Floatech, and that Global Mariner had misrepresented the viability of the acquisition of FPSO DP 1 when it recommended that Floatech purchase the vessel.

THHE alleged that Global Mariner only made partial payment of its shareholding obligation to fund Floatech's operations, based on the 20% stake it owns, which resulted in THHE having to put up RM64.7 million as advance to the joint venture, including RM17.97 million on behalf of its partner. In the suit, THHE also named Global Mariner's shareholders — Zahar Mohd Hashim Zainuddin, Abdul Rahman Mohd Shariff and Nor Badli Munawir Mohamad Alias Latfi — as defendants.

Global Mariner's counsel, David Matthews, confirmed the outcome of the case when contacted. He was assisted by Olivia Loh and Ann Lai. Messrs Izral Partnership represented THHE, while counsels Chetan Jethwani and Alan Wong appeared for the individual defendants named in THHE’s counterclaim.

Global Mariner, which is involved in the marine consultancy business, inked the shareholders agreement with THHE on Feb 18, 2014 to take up the 20% stake in Floatech, with THHE holding the remaining 80%.

According to the agreement, if either of the partners becomes insolvent, the financially distressed partner would have to offer its stake to the other partner within 60 days of a default event — Global Mariner claimed.

Global Mariner claimed that it discovered THHE had become insolvent in 2016 and was unable to pay its debts, with four winding up petitions filed by its debtors — Orwell Offshore Ltd, MIB Italiana SPA, Nusapetro Sdn Bhd and Six Tee Engineering Group Pte Ltd — for the non-payment of over RM45 million owed.

Global Mariner also claimed that THHE's insolvency was obvious based on a company search it conducted, as THHE had a net liability of RM702.8 million at the time, while its net assets only totalled RM297 million.

Subsequently, Global Mariner issued a default sale notice to THHE in July 2016 to buy over THHE's stake, citing THHE's insolvency.

However, THHE denied that it was insolvent in a letter issued by its lawyers in September that year.

This prompted Global Mariner to threaten legal action against THHE, claiming that THHE was refusing to abide by the shareholders agreement to sell its stake in Floatech despite having received the default sale notice to do so.

In the countersuit filed, THHE claimed that Badli, together with Abdul Rahman as the alleged alter ego of Global Mariner, had relied on the actions of Orwell, MIB and Nusapetro to create an event of default, and disputed the winding up petitions filed against it. It also wanted to claim RM17.97 million from Global Mariner which THHE alleged it had paid on the partner's behalf as funding for Floatech.

In addition, it had sought to have the 2014 shareholders agreement declared null and void.

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