KUALA LUMPUR (Sept 8): Gabungan AQRS Bhd has responded to Lien Hoe Corp Bhd’s letter of demand for an outstanding payment on a joint development, citing it as premature and misconceived.

In a statement issued by Gabungan AQRS today, it said “the amount claimed by Lien Hoe's wholly-owned unit Pro-Meridian was clearly and expressively excessive and misleading in the current circumstance”.

Yesterday, Gabungan AQRS Bhd’s wholly-owned property development unit AQRS The Building Company Sdn Bhd (AQRS-TBC) had been served with a letter of demand for the full outstanding payment of RM50.46 million to Lien Hoe Corp Bhd, after the latter allegedly defaulted on its payment schedule.

The letter of demand, which was served by Pro-Meridian Sdn Bhd, requires AQRS-TBC to pay RM50 million and an accrued interest of RM456,954.

To recap, on Sept 30, 2011, Pro-Meridian and AQRS-TBC proposed to jointly undertake the development of two 38-storey blocks of serviced apartments in Johor Baru, which had a gross sale value of RM450 million.

Under the agreement, AQRS-TBC is slated to pay Pro-Meridian a guaranteed share of revenue from the development, amounting to RM117 million cash.

The development was scheduled to be completed by the first half of 2015. On July 22, 2016, the two companies inked a further supplemental agreement to extend the completion date of the apartments.

The agreement was to reschedule the balance payable by AQRS-TBC to Pro-Meridian — amounting to RM61.75 million — in 28 tranches between July 31, 2016 and Aug 28, 2019.

“We will take firm action to not only respond to this Letter of Demand and we have appointed Messrs Zul Rafique & Partners as our Solicitors to appropriately deal with this Letter of Demand to ensure the interest and rights of the Company will be at all times protected,” Gabungan AQRS chief executive officer Datuk Azizan Jaafar said in the statement.

Azizan further added that the development agreement which was first entered into on Sept 30, 2011, was prior to the listing of Gabungan AQRS on Bursa Malaysia on 31 July 2012 and involved senior management team members who have since left the group.

“Hence, a full investigation on this matter will be conducted, including but not limited to the various parties involved and the rationale for the terms and conditions, as contained in the development agreement,” he said.

Gabungan AQRS had earlier halted trading from 9am to 10am, in respect of the announcement.

Its shares are currently trading four sen less or 2.3% at RM1.7, with a market capitalisation of RM747.2 million.