Friday 29 Mar 2024
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This article first appeared in The Edge Financial Daily on February 27, 2018

KUALA LUMPUR: JAKS Resources Bhd’s subsidiary has obtained an interim stay restraining two banks from releasing guarantee proceeds totalling RM50 million to Star Media Group Bhd.

JAKS said the stay order, granted to the 51%-owned subsidiary JAKS Island Circle Sdn Bhd (JIC), would last until the High Court hears the inter-parte injunctions — which will see both sides presenting their arguments — on March 7.

JAKS said in a statement that the interim stay was issued during a case management at the court yesterday.

“Status quo of the bank guarantee thus remains pending the hearing, which had been fixed on March 7,” it added.

JAKS said JIC maintains its earlier views that the call on the bank guarantee by Star on Feb 15 was baseless, and that the subsidiary has valid and sufficient grounds to support that.

Pending the court’s decision on the injunction, JAKS said the ongoing operations of the group and JIC itself, including the on-site development of Pacific Star project, will remain unaffected and will progress on schedule.

“JAKS and JIC have sufficient financial resources and capabilities to ensure the completion and delivery of the Pacific Star project.

“The project has obtained adequate financing facilities from financial institutions and JAKS is in a strong financial position to support, following the asset disposals [as announced in 2017] that strengthened the company’s balance sheet,” it said.

Pacific Star is a project comprising Tower A, an office block of 15-storey building, a 13-storey office suites building (Tower B), two 24-storey residential blocks (Tower C and E), a 15-storey residential block (Tower D), four levels of basement car park as well as a podium, which consists of car parks, office suites and a four-storey commercial centre known as Pacific Star Business Hub.

On Aug 19, 2011, JIC executed the sale and purchase agreement (SPA) with Star to acquire a leasehold land located in Section 13, Petaling Jaya from Star for a consideration of RM135 million to be satisfied via cash and in kind with the delivery of Tower A.

The SPA terms stated that JIC is to provide a RM50 million irrevocable and on demand bank guarantee in favour of Star guaranteeing the completion and delivery of Tower A to the latter within three years from vacant possession date or three years from the date of the approval of the agreed plans for Tower A, whichever is later.

“Since the execution of the SPA, Star Media had, in the course of JIC’s development and execution of Tower A, instructed various changes to be made on Tower A that had prevented JIC from completing Tower A,” it said.

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