KUALA LUMPUR (Nov 7): Hexza Corp Bhd has served a notice of default to Tembusu Industries Ptd Ltd and is considering taking legal action after the private company failed to pay the monthly lease rental for equipment under a January 2015 agreement.

The company said it was weighing its options to recover its investment of US$6 million for an eight-megawatt heavy fuel oil power generation system in Myanmar, for which Tembusu had agreed to lease back for a 10-year period at a monthly rental of US$130,205.

However, Tembusu had failed to adhere to a twice-rescheduled payment timeline, while discussions with directors of Tembusu over the matter could not arrive at an amicable resolution, Hexza said in a filing with Bursa Malaysia today.

The company, which is involved in investment holding and the manufacture of formaldehyde-based resins and ethanol, has also issued a letter of demand to Tin Maung Kyin, a director of Tembusu who had provided a personal guarantee that rent and other monies due would be paid.

Hexza said it had recognized a full provision of RM28.54 million as impairment loss in its first quarter ended Sept 30, 2017.

The provision is expected to have a negative impact on earnings per share and net assets per share of 14.2 sen, the group said.

Hexza’s share closed unchanged today at 98.5 sen, leaving the group with a market valuation of RM198.38 million.