EcoWorld unit sues partners over breach of representations, warranties in MYSJ venture

EcoWorld unit sues partners over breach of representations, warranties in MYSJ venture
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KUALA LUMPUR (April 18): Eco World Development Group Bhd's (EcoWorld) wholly-owned subsidiary Hasrat Budi Sdn Bhd has launched a lawsuit against Revolusi Asia Sdn Bhd, Entomo Malaysia Sdn Bhd and Raveenderen Ramamoothie seeking to recover, among others, costs incurred totalling RM524,787 and general damages to be assessed by the court.

"The suit is filed against the defendants for, among others, breach of certain representations and warranties provided by the defendants to Hasrat Budi under the share sale agreement entered into among the parties on Aug 27, 2021," it said.

In a bourse filing on Monday (April 18), EcoWorld said Hasrat Budi has filed a writ of summons and statement of claim against the three parties in relation to Hasrat Budi's investment in MYSJ Sdn Bhd — the operator of the MySejahtera application.

EcoWorld said the legal action is in addition to and without prejudice to the put option, which has been exercised by Hasrat Budi requiring Entomo Malaysia and Raveenderen to buy back Hasrat Budi's 10% stake in MYSJ at RM24 million plus interest at the rate of 10% per year until date of payment.

"This legal action is not expected to have any material impact on the financial position and operations of the company," said EcoWorld.

On April 5, EcoWorld announced that following the exercise of the put option, Hasrat Budi had a 10% stake in MYSJ and was entitled to one board seat in MYSJ. However, as an investor, Hasrat Budi is not involved in the management or day-to-day operations of MYSJ.

On that same day, it also announced that Hasrat Budi had filed an originating summons seeking the removal of tycoon Tan Sri Shahril Shamsuddin and Anuar Rozhan as directors of MYSJ. It said the legal action was filed to insist on Hasrat Budi's strict contractual rights pursuant to a shareholders' agreement in relation to its shareholding in MYSJ and it was not expected to have any material impact on the financial position of EcoWorld.

Responding to the suit, Shahril in an affidavit sighted by The Edge said his appointment as a director of MYSJ on Dec 6 last year was "valid and proper".

The court has set to hear Hasrat Budi's application to remove Shahril and Anuar on June 9.

Entomo Malaysia is the developer of the MySejahtera app and was formerly known as KPISoft (M) Sdn Bhd. It is 100% owned by Singapore-based Entomo Pte Ltd. Raveenderen is the co-founder and chief executive officer (CEO) of the company and Anuar its co-founder. The two of them and Shahril, the former group CEO of Sapura Energy Bhd, sit on the board of MYSJ.

Raveenderen and Anuar also hold stakes of 76% and 12% respectively in Revolusi Asia, which is the nominee of Entomo Malaysia.

The company, which reportedly entered into a deal with MYSJ to transfer MySejahtera's intellectual rights and software licence to Entomo Malaysia in 2020 for RM338.6 million, in turn holds an 81.43% stake in MYSJ.

EcoWorld's share price settled one sen or 1.04% higher at 97.5 sen on Monday, bringing a market capitalisation of RM2.86 billion.

Read also:
Shahril Shamsuddin opposes suit seeking his removal as MySJ director
EcoWorld says Hasrat Budi not involved in management of MySJ

Kang Siew Li