The Board of Directors of the Company wishes to announce that a Notice pursuant to Section 218(2)(a) of the Companies Act, 1965 dated 18 November 2013 (“Notice of Demand”) has been served on BDSB, a wholly-owned subsidiary of Benalec Sdn. Bhd., which in turn is a wholly-owned subsidiary of Benalec, on 19 November 2013 by Messrs. Chin Yeow Chong & Co., Advocates & Solicitors acting for CESB, demanding payment of RM18,804,281.86 (“Claim”) being costs of services rendered for the proposed coastal reclamation works in Melaka.
BDSB has been given twenty one (21) days from receipt of this Notice of Demand to settle the outstanding Claim, failing which winding up proceedings will be taken against BDSB. The Company is seeking legal advice and will take all appropriate course of actions to resist the Claim including defending the Claim made against BDSB in court.
Details of circumstances leading to receipt of the Notice of Demand
The Claim originated from a purported Letter of Award dated 16 May 2012 between BDSB and CESB of which the Company is now strongly disputing.
Total cost of investment in BDSB
BDSB is not a major subsidiary of Benalec. The total cost of investment in BDSB is RM500,000.00.
Financial and operational impact of the Notice of Demand on the Group
The Notice of Demand is not expected to have any significant financial or operational impact on the Benalec Group as the Group has adequate resources to meet this commitment without any difficulty.
Expected losses, if any, arising from the Notice of Demand
In the event that BDSB is not successful in its defence against the Claim made by CESB, the expected losses to BDSB will comprise satisfaction of the Claim plus legal costs and interest.
Steps taken and proposed to be taken by BDSB in respect of the Notice of Demand
The Company and BDSB have commenced a civil suit in the Kuala Lumpur High Court on 6 November 2013 vide Civil Suit No. 22NCVC-614-11/2013 against Datuk Leaw Tua Choon, Datuk Leaw Ah Chye, Leaw Yongene and CESB for inter alia, a declaration that the Letter of Award dated 16 May 2012 between BDSB and CESB was void ab initio and/or for loss and damage as well as for an account of secret profits arising from the breach on the part of Datuk Leaw Tua Choon and Datuk Leaw Ah Chye of their contractual, statutory, fiduciary and/or common law duties and/or obligations as Executive Directors of the Company and BDSB in respect of certain dealings concerning CESB.
Further announcement on development of the above matter will be made to Bursa Malaysia Securities Berhad in due course and as and when applicable.
This announcement is dated 21 November 2013.
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