Thursday 28 Mar 2024
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KUALA LUMPUR (Feb 23): The Hong Kong High Court has dismissed Lippo Group television units' application to set aside the payment of US$46.77 million in damages that was awarded to Astro Malaysia Holdings Bhd's wholly owned subsidiary MEASAT Broadcast Network Systems Sdn Bhd and seven other Astro units by the Singapore International Arbitration Centre (SIAC).

In a filing with Bursa Malaysia today, Astro (fundamental: 1.1; valuation: 2.1) said the Hong Kong High Court had ruled that Lippo Group's PT First Media Tbk (PTFM) was not permitted to resist enforcement of the awards granted earlier to Astro andi ts units (claimants) as PTFM had acted in breach of the good faith principle in its conduct in the arbitration.

Further, Astro said the Hong Kong High Court has found that PTFM had taken a deliberate decision not to take action within the time limited to challenge enforcement of the awards in Hong Kong, and that the arbitration awards remains valid and binding even though PTFM had successfully resisted enforcement of the awards in Singapore.

Astro said the Hong Kong High Court has declined to exercise its discretion to grant an extension of time to PTFM to apply to set aside the awards. 

"Consequently, PTFM's setting aside application in Hong Kong was dismissed in its entirety," said Astro.

To recap, Astro had entered into a a conditional Subscription and Shareholders Agreement with Lippo subsidiaries PT Ayunda Prima Mitra (PTAPM) , PT First Media Tbk (PTFMT) and PT Direct Vision (PTDV) - the latter at the time owned a multi-media licence awarded by the Indonesian government - to set up a pay TV business in Indonesia in early 2005.

However, the partnership encountered some resistance and the conditions precedent in the SSA were never completed, so the SSA lapsed in 2006. It later became clear that the partnership was a no-go, so the parties decided to terminate discussions and Astro then pulled its support, fund and services to PT Direct Vision that were extended in anticipation of the conclusion of the intended joint venture. 

The parties then went on to arbitrate their dispute on the discontinuation of the provision of support and services by Astro to PT Direct Vision, in relation to the partnership, in Singapore. 

An arbitral tribunal of the SIAC had in 2010 ruled in favour of Astro and the units involved and granted them an award amounting to approximately US$303 million, plus interest.
 
But the arbitration awards have remained unpaid by the Lippo units up till now even though the arbitration awards are registered in four jurisdictions, namely Malaysia, Singapore, Indonesia, and Hong Kong.

The claimants, being Astro's subsidiaries, wanted to enforce the awards against PTFM and later applied to the Hong Kong High Court in July 2011. The court granted a garnishee order nisi, whereby PTFM's parent AcrossAsia Ltd (AAL) was required to pay the claimants the loan AAL owed to PTFM as partial settlement of the amounts outstanding to the claimants from PTFM under the awards granted by SIAC.

Subsequently, in January 2012, PTFM applied inter alia for, among others, an extension of time to apply to set aside the court orders to enforce the awards granted by the arbitration, and that the garnishee order nisi be set aside.

On 31 October 2013, the Hong Kong High Court ruled in favour of the claimants and, inter alia, granted a garnishee order absolute requiring AAL to make repayment of the loan to the claimants.

AAL and PTFM then appealed against the decision of the Hong Kong High Court granting a garnishee order absolute, and obtained a stay of execution of the garnishee order absolute pending determination of the HK Setting Aside Application.

"The company wishes to announce that the Hong Kong High Court has on 17 February 2015 ruled on the HK Setting Aside Application in favour of the claimants," said Astro in its filing today.

Astro, one of the FBM KLCI's component stocks, closed one sen higher today at RM3.19. It has a market value of RM16.54 billion.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)

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