MATERIAL LITIGATION HANDAL RESOURCES BERHAD In the High Court of Malaya at Kuala Lumpur Writ Summons No. WA-2NCC-35-01/2019 Kemuncak Lanai Sdn Bhd vs Handal Resources Berhad

HANDAL RESOURCES BERHAD

Type Announcement
Subject MATERIAL LITIGATION
Description
HANDAL RESOURCES BERHAD
In the High Court of Malaya at Kuala Lumpur Writ Summons No. WA-2NCC-35-01/2019
Kemuncak Lanai Sdn Bhd vs Handal Resources Berhad

The Board of Directors of Handal Resources Berhad (“Handal” or “the Company” or “the Defendant”) wishes to announce that the Company had on 24 January 2019 been served a copy of the Writ of Summons and Statement of Claim (“Suit”) from Kemuncak Lanai Sdn Bhd (“Kemuncak”).

 

Background

 

Reference is made to the Company’s announcement dated 24 January 2018, the Company and Kemuncak entered into a share sale agreement dated 22 January 2018 (“SSA”) to acquire 51% equity interest in Handal Simflexi Sdn Bhd (then known as Simflexi Sdn Bhd).

 

Pursuant to the SSA, the Company will purchase 51,000 shares in Handal Simflexi Sdn Bhd for a total consideration of RM5,100,000. The sum of RM2,550,000 had been paid by the Company to Kemuncak.

 

Kemuncak provided the following profit guarantee on the financial performance of Handal Simflexi Sdn Bhd:-

 

Warranty Period

Financial Year

Guaranteed Profit

Warranty Period 1

1 January 2018 to 31 December 2018

Not less than RM 2,500,000.00

Warranty Period 2

1 January 2019 to 31 December 2019

Not less than RM 3,500,000.00

Warranty Period 3

1 January 2020 to 31 December 2020

Not less than RM 5,750,000.00

 

The balance purchase sum of RM2,550,000 shall only be made upon Kemuncak paying the Company all the shortfall on the guaranteed profit.

 

Kemuncak’s Claim

 

In the Suit, Kemucak is making a claim for:

 

i) A declaration that the profit guarantee provided in Clause 6 of the SSA is void and be severed from the SSA;

 

ii) the payment of the balance purchase sum of RM2,550,000.00;

 

iii) general damages;

 

iv) interests of 5% per annum calculated from the date of Writ of Summons until date of full realisation;

 

v) costs; and

 

vi) any other and further reliefs that the Court deems necessary and appropriate.

 

The matter is fixed for case management  on 7 February 2019.

 

Impact of the Suit

 

The Company is currently seeking legal advice in relation to the Suit. The management’s initial assessment is that Kemuncak’s claim is misconceived and the Company will contest it vigorously.

 

The Group will actively seek continuous advice from the professional advisers to formulate solutions to mitigate the possible effects of the Suit which may include the filing of counterclaim to protect its rights under the SSA.

 

The Company is closely monitoring the progress of the Suit and will make further announcement(s) as and when appropriate to inform the shareholders and Bursa Malaysia Securities Berhad if there is any significant development in respect of this matter.

 

This announcement is dated 24 January 2019.

 






Announcement Info

Company Name HANDAL RESOURCES BERHAD
Stock Name HANDAL
Date Announced 24 Jan 2019
Category General Announcement for PLC
Reference Number GA1-24012019-00097