KUALA LUMPUR (Jan 18): Parkson Holdings Bhd announced that Parkson Vietnam Co Ltd (PVC) had received a letter from its landlord in Vietnam alleging, among others, that PVC is required to pay a total amount of VND66.2 billion (approximately S$3.8 million or RM12 million based on an illustrative exchange rate of VND17,369: S$1) to the landlord for unpaid and outstanding rental and late payment charges.
This is for the period of April 15, 2019 to Jan 14, 2021 and compensation for early termination of the lease (revised claim amount), and that the premises in Danang, Vietnam were to be returned to the landlord by Jan 14, 2021.
PVC is a wholly-owned subsidiary of Singapore-listed Parkson Retail Asia Ltd, which in turn is a 67.96%-owned unit of Parkson.
“PVC intends to dispute the quantum of the alleged revised claim amount, and has engaged a Vietnamese counsel to advise on the merits of the case and to defend PVC's interests in the arbitration proceedings,” Parkson Retail executive chairman Tan Sri William Cheng said in a Bursa Malaysia announcement this morning.
“In view that the department store on the premises has been loss-making for a number of years, and given the aggravating impact of the Covid-19 pandemic and the global economic downturn on business operations, PVC has communicated to the landlord its decision to suspend the operations of the department store with effect from Jan 14, 2021,” he added.
Cheng also noted that the increase in the revised claim amount, as compared with the original claim amount, is principally attributable to the landlord's demands for early termination compensation and forfeiture of the security deposit currently held by the landlord which, he said, “PVC intends to challenge”.
“Notwithstanding that PVC continues its negotiations with the landlord in respect of the revised claim and the alleged amount payable thereunder, the landlord has informed that it intends to submit additional petitions to the VIAC (Vietnam International Arbitration Centre) to amend the arbitration request in accordance with the revised claim,” he added.
Cheng is also the chairman and managing director of Parkson, and had a 31.96% stake in the Bursa-listed company as at Sept 30, 2020.
In the announcement today, Cheng said Parkson Retail “is presently unable to determine the exact financial impact of the ongoing dispute with the landlord on the financial position of the group for the current financial year ending June 30, 2021 (FY21) as it will be dependent on the developments to the arbitration proceedings”.
“The company will consider if any further provisions may be necessary in view of these latest developments.
“Notwithstanding that a portion of the revised claim amount has been accrued in the financial statements for FY21 of PVC, in view of the quantum of the revised claim amount, in the event PVC is required to settle the revised claim amount in full, it will likely result in an adverse impact on the financial position of the group for FY21,” he noted.
Prior to the revised amount of VND66.2 billion, the landlord had claimed from PVC an aggregate amount of approximately VND26.9 billion (approximately S$1.6 million or RM4.8 million) in alleged unpaid and outstanding rental and late payment charges for the period of April 15, 2019 to Aug 14, 2020.
The premises leased were for a term of 10 years from Feb 15, 2015.
Parkson shares on Bursa were suspended for an hour this morning from 9am to 10am.
At the time of writing today, the stock was up 3.03% at 17 sen.