Ocean Electrical sues YFG unit for RM5m

PETALING JAYA: YFG Bhd’s subsidiary YFG Engineering Sdn Bhd (YFGE) has received a letter of demand for outstanding liquidated damages of RM5 million from Ocean Electrical Co Sdn Bhd (OEC) in relation to the termination of a letter of sub-contract award (LoA).
OEC had via the LoA dated Jan 6, 2016, awarded to YFGE the contract of mechanical and electrical works for a new regional sewerage treatment plant in Jinjang, Kuala Lumpur, for RM200.93 million.
This was followed by a supplementary LoA dated Jan 7, 2016, whereby the LoA could be terminated if YFG managing director Lim Chong Ling and/or the executive director resigned or was removed from office, and if the composition of the board was changed.
OEC alleged that YFG had breached the conditions in the LoA as six directors, including Lim, were removed at an EGM on Sept 29, 2016.
“Accordingly, OEC had, vide a letter dated Sept 29, 2016, terminated the LoA and reserved its rights to claim the liquidated damages of RM5 million,” YFG said in a filing with the stock exchange last Friday.
YFG stressed that the estimated potential liability is up to the amounts claimed together with an interest rate of 5% a year.