China court orders freeze on Parkson units' assets worth RM126m

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KUALA LUMPUR (July 18): China's Intermediate People's Court of Suzhou, Jiangsu Province has ordered that the bank deposits of Changshou Parkson Retail Development Co Ltd (Parkson Development) and Parkson Investment Holdings Co Ltd totalling RMB212.41 million (RM126.12 million) or an equivalent value of other assets be frozen with immediate effect.

Parkson Development and Parkson Investment are both indirect wholly-owned subsidiaries of Hong Kong-listed Parkson Retail Group Ltd (PRGL), a 54.67%-owned unit of Parkson Holdings Bhd.

In a filing with Bursa Malaysia today, Parkson Holdings said PRGL, however, did not have any knowledge on the litigation until Parkson Development had received the enforcement notice on July 14, 2016 with the judgement attached.

The group added there wasn't any pending or threatened litigation or claim in relation to the litigation against any member of the group prior to Parkson Development's receipt of the enforcement notice

"None of the bank deposits of Parkson Development or Parkson Investment has been frozen as at the date of this announcement and neither Parkson Development nor Parkson Investment has received any notice in relation to the enforcement of the judgement except for the enforcement notice," read PRGL's announcement,

PRGL has appointed a legal adviser in China to advise the group on the lawsuit.

"The company has received an advice from the legal adviser earlier today that based on the information available as at the date of this announcement, there is no reasonable ground to explain why Parkson Development and Parkson Investment are involved in the litigation.

"The company is seeking further information and clarification in this regard and will issue further announcement(s) as and when appropriate," said the group.

To recap, Parkson Investment and its landlord, Changshou Hang Lung Properties Co Ltd had entered into a tenancy agreement in December 2008 (original tenancy agreement) in respect of the premises located at the first floor underground and the five floors above ground of Hang Lung Centre, 106 Fangta Street, Changshou, Jiangsu.

At present, the premises are used by Parkson Development as a department store.

On July 10, 2009, Parkson Investment, Parkson Development and Changshou Hang Lung Properties had entered into an agreement in relation to the transfer of the tenancy under the original tenancy agreement, pursuant to which Parkson Development replaced Parkson Investment as the tenant under the original tenancy agreement.

Parkson Development then received a notice of assistance in enforcement dated July 14, 2016 together with a civil judgment dated June 7, 2016, issued by the Court in relation to a dispute over a loan agreement.

The dispute involves China Construction Bank Corp, Changshou Branch as the plaintiff, and Changshou Hang Lung Properties, Parkson Development, Parkson Investment and three other parties as defendants.

China Construction Bank had applied to the court for an order on preservation of properties and requested that the bank deposits of the defendants in the amount of RMB212.41 million, or an equivalent value of other assets, be frozen.

According to the enforcement notice, Parkson Development was requested to cease payment of rental for the premises to the landlord from July 14 this year to July 13, 2018.

Parkson Holdings shares closed down 0.5 sen (0.6%) to 82.5 sen today, for a market capitalisation of RM860.23 million.