KUALA LUMPUR (Nov 19): Handal Energy Bhd (KL:HANDAL) was slapped with a RM132.6 million counterclaim from a former joint venture (JV) partner, alleging a breach of their JV agreement.
The former partner, Davina Markus, claims that Handal Energy’s sale of its 49% stake in marine sand mining JV Handal Borneo Resources Sdn Bhd (HBR) to Handal Energy Borneo Sdn Bhd (HEB) for RM529,900 in July last year was done without her consent or knowledge, according to a bourse filing on Tuesday.
“By reason thereof, Handal Energy has been wrongfully replaced by HEB as the ‘JV partner’ of Markus without her consent and agreement; and caused the breach of and termination of the operations and management (OM) agreement with [Tanjung Aru Eco Development Sdn Bhd (TAED)] and the resulting loss and damage to Markus and/or HBR,” the filing read.
The JV was formed in July 2022, whereby Handal subscribed to the 49% stake in the company for RM529,900. Its purpose was to secure a marine sand mining agreement from TAED, a unit of Chief Minister of Sabah Inc, which it did in December 2022.
The agreement permitted HBR to operate, manage, extract and sell marine sea sand from three concession areas mainly for the bulk filling of the Tanjung Aru beach reclamation project.
Markus claims the agreement has since been terminated. She is claiming RM132.6 million in damages via the counterclaim.
“In the event the suit is not in favour of [Handal Energy], the financial impact to the company shall be limited to the amount awarded by the court,” Handal Energy said.
“Apart from the claims by [Markus] and legal cost to be incurred by the company, the litigation is not expected to have any financial and operational impact and will not affect the operation at the group level,” it added.
Besides Handal Energy and HBR, Markus’ counterclaims also name former Handal Energy managing director and substantial shareholder Sunildeep Singh Dhaliwal. HEB is 99.9%-controlled by Sunildeep via Seaoffshore Capital Sdn Bhd.
The filing did not disclose information pertaining to the initial suit.
A month after Handal Energy announced its plans to dispose of its stake in HBR to HEB in July 2023, Sunildeep ceased to be a substantial shareholder of Handal Energy. However, he only resigned from the group managing director post in February this year.
According to Handal Energy’s stock exchange filing in July last year announcing the disposal, HBR has been loss-making for three consecutive years up to FY2022 — net loss of RM6.32 million in FY2022, RM6.06 million in FY2021 and RM5 million in FY2020.
Sunildeep-linked Seaoffshore Shared Sdn Bhd sued Handal Energy back in August this year claiming RM9.58 million in purported unpaid management services.
Allegedly sidelined
Besides the “wrongfully replaced” JV partner, Markus claimed she had been sidelined in HBR’s operations despite being the majority 51% owner and director.
She claims that once the OM was secured from TAED in December 2022, a copy of the agreement was never shared with her despite repeated requests.
This was one example of the alleged wrongful conduct undertaken by Handal, HBR and/or Sunildeep, acting alone or in concert, which breached her rights and interest as a director and major shareholder of HBR.
She also alleged that access to her company email was removed, and she was also refused access to “all financial reports, accounts, correspondences, communications and decisions of HBR".
Markus further claims that she was not given notice for board meetings and was not provided the opportunity to attend such meetings. She also claims not to be allowed access to the JV’s office premises in Kota Kinabalu, Sabah.
“Further in breach of the OM agreement, Markus was excluded from the communication and correspondence between HBR and/or Handal Energy with TAED in regard to matters relating to the OM agreement,” the filing read.
“HBR and/or Handal Energy failed to comply with the contractual obligation of HBR under the OM agreement resulting in its termination by TAED,” it added.
Shares in Handal ended one sen or 14.29% lower at six sen, valuing the company at RM24.64 million. The offshore crane services provider has been loss-making for five consecutive quarters.