KUALA LUMPUR (Nov 14): Parkson Holdings Bhd’s Cambodian unit has initiated arbitration proceedings against Hassan (Cambodia) Development Co Ltd (HCDC) for prolonged delays in handing over  new store premises in Phnom Penh.

Parkson’s 67.96%-owned subsidiary, Parkson Retail Asia Ltd (PRA), which is listed in Singapore, issued a notice of arbitration to HCDC via its wholly-owned Cambodian unit, Parkson (Cambodia) Co Ltd (PCCO) today.

According to PRA, HCDC was supposed to have completed and handed over the premises in a new building to be constructed by Dec 31, 2016.

“Following failure by HCDC (as the lessor) to remedy its breaches, PCCO terminated the lease agreement by notice to the lessor,” PRA said in a Singapore stock exchange filing.

Although PCCO had notified HCDC to make full refunds of its security deposit and advanced rental amounts, the lessor objected to PCCO’s right to terminate the agreement and refused to return the funds.

“Parties have not been able to reach amicable resolution to these matters,” PRA said.

It noted that it had already recognised impairment losses in connection with the full amounts of prepaid rental, rental deposit and property, plant and equipment of the Cambodian store in view of the delays.

“Accordingly, the group does not expect the arbitration to have a material adverse effect on its operations and/or its financial performance,” PRA said.

It is seeking advice from Cambodian legal counsel and added that it “intends to vigorously pursue its claims against HCDC”.

PRA also said that it does not expect any material impact on its earnings for its financial year ending June 30, 2019 from the arbitration.

Shares in Parkson rose 0.5 sen or 1.47% to 34 sen today, leaving the group with a market capitalisation of RM368.19 million.