KUALA LUMPUR (Dec 8): EcoFirst Consolidated Bhd, which is facing a RM20 million lawsuit for withdrawing a RM404.35 million contract it had issued to Kerjaya Prospek Group Bhd, said the group will be contesting the matter.
In a filing on Friday, EcoFirst said the lawsuit was filed against its wholly-owned subsidiary BCM Holdings Bhd by Kerjaya Prospek's wholly-owned unit Kerjaya Prospek (M) Sdn Bhd (KPM) on Wednesday.
The suit was over a contract for the construction of a residential development in Kuala Lumpur issued by BCM to KPM in June.
On Nov 16, BCM issued a letter to KPM to "recant the contract and consider itself not bound by the terms of the contract,” EcoFirst noted in its filing.
“Subsequently on Nov 21, KPM enforced its right to recover the pre-agreed damages pursuant to Clause 14 of the contract, which stated that in the event of pre-determination of the letter of award or contract or any contract and or agreement by BCM, BCM shall irrevocably and immediately compensate and pay KPM termination damages for a sum of RM20 million,” noted EcoFirst.
Kerjaya Prospek, in a bourse filing on Nov 23, said that its solicitor had issued a letter to BCM, instructing the company to pay the RM20 million within seven days from Nov 21, failing which legal action will be initiated.
Responding to the lawsuit filed on Wednesday, EcoFirst said: “BCM has instructed its solicitors to contest the matter to defend its interest.”
“The financial impact of the (suit) on the group, if proceeded, will be an outflow of cash funds as per the amount (RM20 million, interest and costs) claimed,” said EcoFirst, adding that there is no operational impact on the group.
Shares in EcoFirst ended half a sen or 1.43% higher at 35.5 sen, giving the group a market capitalisation of RM422.86 million. Kerjaya Prospek closed three sen or 2.04% lower to RM1.44, valuing the company at RM1.82 billion.