KUALA LUMPUR (Nov 17): Far East Holdings Bhd (FEHB)’s unit Kampong Aur Oil Palm Company Sdn Bhd (KAOP) has ceased to be the group’s subsidiary following the conclusion of material litigations between the two companies and the Pahang Islamic Religious and Malay Customs Council (MUIP) which commenced in 2012.

In a filing today, FEHB said the Federal Court has dismissed all three appeals pertaining to the legal dispute.

The appeals, two by FEHB and KAOP and one by MUIP, were made against the decisions of the Court of Appeal in July 2015 which had affirmed an earlier decision by the High Court.

Prior to that, MUIP had in 2012 filed for arbitration proceedings against FEHB and KAOP over a dispute with regard to the allotment of shares in KAOP. Subsequently the matter proceeded to the High Court.

Following the decision of the Federal Court, FEHB is required to transfer 6.72 million KAOP shares to MUIP together with delivery of the pertinent share certificates, and MUIP is to be registered as the new holder of shares.

Additionally FEHB is to pay RM32.04 million and RM50,000 in costs to MUIP, while MUIP is to pay RM19.88 million in costs to FEHB.

FEHB is also required to return a sum of RM105.49 million to KAOP.

“In view of the above decisions, KAOP ceased to be a subsidiary of FEHB and the financial impact of the group will be taken up in the fourth quarter of 2017,” said FEHB.

The relationship between the parties was established soon after MUIP had requested the Pahang government to alienate a piece of land for the cultivation of commercial crops to generate revenue for the council, and  the state government subsequently approved the alienation of 11,073 acres of land to the council.

As  MUIP did not have the experience or expertise to cultivate oil palm and needed to engage a third party with the financial capability and experience to develop the alienated land as oil palm estates, the council decided to enter into a deal with FEHB and KAOP in 1992.

FEHB’s shares closed down one sen or 0.10% to RM9.49 today, giving it a market capitalisation of RM1.34 billion.