KUALA LUMPUR (Feb 19): JAKS Resources Bhd has instructed its solicitors to file an injunction at the High Court to restrain two financial institutions from releasing a bank guarantee related to the acquisition of a piece of land from Star Media Group Bhd.

The irrevocable and on demand bank guarantee was made as security to ensure JAKS Island Circle Sdn Bhd (JIC) — a 51%-owned unit of JAKS — performs its obligations under the sale and purchase agreement signed with Star Media in August 2011 for the purchase of land for RM135 million.

The SPA followed the joint development agreement (JDA) signed in 2010 for a mixed development project to be constructed on the piece of land in Section 13, Petaling Jaya, with an estimated gross development value of RM370 million.

The JDA included the obligation for the delivery of Tower A — a 15-storey office block — by JIC within three years from vacant possession or the date of approval of the plans for the tower.

The RM50 million bank guarantee comprises guarantees of RM25 million each from two financial institutions. One guarantee had expired on Feb 15, while the other will be expiring on April 15.

JAKS said Star Media has not granted an extension for the bank guarantee and has given notice to the two issuing financial institutions on Feb 15 to call on the bank guarantee, which means that JIC will have to pay the RM50 million sum to the issuers.

“The board of directors of JIC has since instructed its solicitors to file with the High Court in Kuala Lumpur an injunction (either on an ex-parte basis or if the court so directs, an inter-parte basis) to restrain the issuing financial institutions of the bank guarantee from releasing, and the beneficiary of the bank guarantee, i.e. Star Media from receiving, the proceeds of the bank guarantee,” said the company.

It said the call on the bank guarantee is baseless, adding that JIC has valid grounds for the court to grant the injunction, as it said Star Media had prevented the completion of Tower A.

JAKS' share price gained 4 sen or 2.22% to RM1.84 today, translating to a market capitalisation of RM895.91 million.

Star Media fell 1 sen or 0.72% to close at RM1.37, giving it a market capitalisation of RM1.01 billion.