CEMENT manufacturer Holcim Philippines, Inc. may have to pay up to P610.34 million to its former port operator, which it has been in conflict with over the termination of a port services agreement.
The company told the exchange on Tuesday it had received an order from the arbitral tribunal handling the case, which ruled it liable for the suspension of its memorandum of agreement (MoA) with port operator Seasia Nectar Port Services, Inc.
Seasia filed a petition against Holcim in October 2018 for the termination of its port services agreement. Holcim said then that the decision was ”pursuant to its no-fault termination rights under the said agreement.”
In its September 2020 order, the arbitral tribunal said the termination of the contract was indeed valid. However, the MoA that the two companies signed, which required them to enter into a port services agreement, was not superseded when Holcim terminated the contract, and therefore remains in effect.
“The arbitral tribunal therefore ruled that Seasia was entitled to compensation as a result of the suspension of the memorandum of agreement,” it said.
Seasia may choose between getting a P588.38-million compensation from Holcim, which represents the minimum revenue it could have generated if the MoA were not suspended, or getting a two-year extension of the MoA, which would result in a total remaining term of seven years and 10.5 months.
Holcim must also reimburse P21.96 million to Seasia, which the latter paid to the Philippine Dispute Resolution Center, Inc. for the resolution of the case.
Holcim has 30 days from Sept. 14 to appeal the decision of the arbitral tribunal. It declined to comment when asked by BusinessWorld whether it will avail of this option.
The company noted the legal proceedings do not have a material impact on its operations.
Holcim posted an attributable net profit of P413.17 million in the six months to June, down by 71% from a year ago, as it turned unprofitable in the second quarter due to coronavirus-related challenges.
Shares in Holcim at the stock exchange fell 17 centavos or 2.85% to P5.80 each on Tuesday. — Denise A. Valdez