A pair of Red Deer companies are embroiled in a multimillion-dollar lawsuit related to a plant dismantling project in British Columbia that they worked on together.
Bula Enterprises Ltd. is suing Blue Horizon Contracting, a division of Blue Horizon Energy Inc., for $643,000. Blue Horizon Contracting has responded with a $19-million counterclaim against Bula.
The conflict stems from a February 2011 agreement that Blue Horizon Contracting struck with Chinese companies Ko Yo Development Co. Ltd. and Guangan Lotusan Natural Gas Chemical Co. Ltd. to dismantle a methanol plant and other facilities near Kitimat, B.C.
In May, Blue Horizon Contracting hired Bula to do some of the work.
Blue Horizon Contracting announced in November that Ko Yo and Guangan Lotusan had terminated the dismantling agreement, with more than $4 million still owing.
That matter is now subject to arbitration, with Ko Yo and Guangan Lotusan required to post security in court before the equipment could be released for shipment to China.
Bula says in its statement of claim that it was not paid for services it performed; Blue Horizon Contracting alleges that the work was not completed as required.
Blue Horizon Contracting also says in its counterclaim that Bula encouraged Ko Yo and Guangan Lotusan to terminate the primary dismantling contract, so that it could take over as the main contractor.
It says this resulted in it not being paid $4.5 million for work done, losing a further $5 million that it might have earned under the contract and for subsequent work related to the project, and possibly losing the opportunity to earn $9 million for another unrelated project.
Blue Horizon Contracting is also seeking $500,000 for indirect damages.
Bula’s statement of claim was filed on Jan. 27, and Blue Horizon Contracting’s statement of defence and counterclaim were filed on March 23.
Malcolm McKimm, Bula’s chief financial officer, told the Advocate on Wednesday that his company was in the process of filing a statement of defence to Blue Horizon Contracting’s counterclaim.
Allegations contained in statements of claim, counterclaim and defence have not been proven in court.
McKimm said Bula has now completed the Kitimat dismantling project for Ko Yo and Guangan Lotusan. He said Bula was retained by the Chinese companies after their contract with Blue Horizon Contracting was terminated, and after they considered several companies for the work.
Blue Horizon Energy is a subsidiary of Red Deer-based Blue Horizon Industries Inc. (CNSX:BH). In addition to the dismantling and related work done by its Blue Horizon Contracting division, Blue Horizon Energy explores for oil and gas in Western Canada. Blue Horizon Industries also owns Blue Horizon Bio-Diesel Inc., which is building a pilot bio-diesel manufacturing plant, and has a 74 per cent interest in Blue Horizon Mining Inc., which is involved in mining projects.
Bula has its headquarters in Red Deer with branches in Drayton Valley, Blackfalds and Fort McMurray. It performs services related to the installation, maintenance and dismantling of equipment in various industries.
Meanwhile, Blue Horizon Industries announced last week that Eric Leslie resigned as a director of the company on March 29. Aric Ferguson, president and CEO of private investment firm Zydeco Capital Inc. and a consultant to Blue Horizon Industries, has stepped into the vacant position.