KUALA LUMPUR (Nov 2): The board of Ire-Tex Corp Bhd has initiated fresh legal proceedings against Teh Eng Huat and Khoo Hun Sniah for alleged breach of profit guarantee obligations by the duo relating to an agreement inked with the group in 2013.

Teh is a former director of the loss-making packaging manufacturer, while Khoo was a staff at the group’s subsidiary, Zoomic Technology (M) Sdn Bhd (ZTSB).

In a filing with Bursa Malaysia today, Ire-Tex said it is commencing the suit against Teh and Khoo, after an earlier suit was voluntarily discontinued on April 17, with liberty to file afresh.

“Having reviewed the matter further, the board is of the view that it is in the best interest of the company to commence fresh legal proceedings against Teh and Khoo in respect of the said sale and purchase agreement  (SPA) dated 18 November 2013,” Ire-Tex said.

Ire-Tex had inked the SPA with Teh and Khoo to acquire industrial machineries systems consultant Zoomic Automation (M) Sdn Bhd (ZASB) and ZTSB from the duo for a total consideration of RM25 million.

According to Ire-Tex, the duo guaranteed a profit from ZASB and ZTSB amounting to RM8.82 million for the 10-month period ended Dec 31, 2013, and in its financial year ended Dec 31, 2014 (FY14), in the supplementary contracts that followed. 

On Oct 2, 2015, Ire-Tex initiated the first proceedings against the duo, claiming there is a shortfall of RM6.32 million from the guaranteed profit. 

On April 26 this year, the group announced its decision to terminate the suit, after it found its subsidiary Ire-Tex Paper Packaging Sdn Bhd had made an order worth RM16.8 million to ZASB for machineries, which was never cancelled. 

“Both directors of Ire-Tex involved in the machinery deal have resigned from the company and since Teh Eng Huat was no longer at the helm of ZASB, eventually the profit guarantee was not met.

“With the discovery of the purchase orders, the company is of the view that it would be prudent and in the best interests of the company to discontinue the action against the defendants,” the filing said.

It is worth noting that Teh and Khoo were shareholders of Ire-Tex, and were involved in a courtroom battle with substantial shareholder Elite Cosmo Group Ltd and another shareholder Tan Yeang Tze earlier this year, as both camps tried to stop each other from appointing directors in the group.

Shares of Ire-Tex lost half a sen or 2.86% today, giving the group a market capitalisation of RM23.48 million.