BLand halts work at Jeju Airest City, sues Korean govt unit over land buy issues

BLand halts work at Jeju Airest City, sues Korean govt unit over land buy issues
-A +A

KUALA LUMPUR (Nov 6): Berjaya Land Bhd (BLand) is suing a unit of the Korean government for losses and damages incurred due to an alleged breach of agreement in a land sale agreement in relation to BLand's Jeju Airest City development in Jeju Island, South Korea.

However, In BLand's announcement to Bursa Malaysia this evening about the initiation of the legal proceedings, the quantum of losses and damages it is seeking was not specified.

Meanwhile, BLand has suspended ongoing development works at Jeju Airest City, a reported 183.8-acre integrated resort development that is said to carry an estimated gross development value of US$2.4 billion (RM10.34 billion).

BLand said its 72.6%-owned subsidiary Berjaya Jeju Resort Ltd (BJR) had on Nov 6 instituted legal proceedings in Korea against Jeju Free International City Development Center (JDC) for the alleged breach by JDC of certain conditions in the land sale and purchase agreement (SPA) dated March 30, 2009, that was entered into between BJR and JDC.

BJR is the master developer of the project while JDC, a company under the supervision of the Ministry of Land, Infrastructure and Transportation of the Republic of Korea, holds a 19% stake in BJR, said BLand.

BLand said pursuant to the SPA, JDC is obligated to transfer the lands acquired thereunder to BJR, "free from all liens, security interests and encumbrances".

"However, on March 20, the Supreme Court of the Republic of Korea (Korean Supreme Court) ruled that the expropriation by JDC of certain parcels of lands, which were subsequently sold to BJR pursuant to the SPA, was invalid.

"Hence JDC had breached the terms of the land SPA, as it failed to transfer good and unencumbered title to the said lands to BJR," said BLand.

Consequently, certain former owners of the said lands had filed a suit demanding that the said lands be returned to them, said BLand.

"Under the circumstances, the ongoing development works on the Jeju project has been suspended pending the resolution of this matter by JDC with the affected landowners," said BLand.

BLand said BJR decided to institute legal proceedings against JDC for the breach of contract after seeking legal advice.

"The JDC lawsuit is not expected to have any material adverse effect on the BLand Group for the current financial year ending April 30, 2016.

"Appropriate announcement(s) will be made in due course on any material development and the financial impact pertaining to the JDC lawsuit," it added.

BLand's shares closed one sen or 0.73% higher at 69 sen today, for a market capitalisation of RM3.44 billion.

Year to date, the counter has fallen 13.75% from when it was trading at 80 sen on Dec 31, 2014.

(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.)