Bursa Announcements

Reference is made to our announcements dated 18 August 2017, 5 January 2018, 11 January 2018, 16 November 2018, 14 December 2018 and  8 October 2020 pertaining to the Writ of Summons and Statement of Claim filed by Transnasional Express Sdn. Bhd. (“Transnasional”), Plusliner Sdn. Bhd. (“Plusliner), Syarikat Kenderaan Melayu Kelantan Berhad (“SKMK”), Syarikat Rembau Tampin Sdn. Bhd. (“SRT”), Kenderaan Langkasuka Sdn. Bhd. (“Langkasuka”), Konsortium Transnasional Berhad (“KTB”) and MHSB Properties Sdn. Bhd. (“MHSB”) (collectively “the Plaintiffs”) against Tan Chong Industrial Equipment Sdn. Bhd. (“TCIE”), a wholly-owned subsidiary of Tan Chong Motor Holdings Berhad (“TCMH”).

Background:

TCIE entered into a series of lease agreements with Transnasional, Plusliner and SKMK and a series of service maintenance agreements with Transnasional, Plusliner, SKMK, SRT and Langkasuka (collectively “the Debtors”) for the lease and service maintenance of the vehicles. The Debtors owed TCIE outstanding rentals and service bills under the agreements amounting to RM32,920,575.06 (“Debt”).

After lengthy negotiations, on 4 July 2016, the Debtors and KTB mutually agreed to enter into a Settlement Agreement with TCIE  (“Settlement Agreement”) with the following, inter alia, terms:-

(i)            to settle the Debt by transferring a piece of land held under H.S.(D) 87546, PT No. 7929, Bandar Ampang, Daerah Ulu Langat, Negeri Selangor (“Land”) from MHSB to TCIE at an agreed price of RM16,000,000.00, and repayment of the balance debt of RM16,920,575.06 in several cash instalments (“Balance Debt”); and

(ii)           in the event of breach of the Settlement Agreement, TCIE is entitled to terminate the Settlement Agreement and repossess the vehicles.

Pursuant to the Settlement Agreement, a Sale and Purchase Agreement was entered into between MHSB and TCIE on 4 July 2016 for the sale of the Land.

The Plaintiffs failed to make timely repayments of the Balance Debt. Hence, TCIE exercised its contractual rights under the Settlement Agreement to repossess the vehicles leased to the Debtors.

Status:

On 11 August 2017, the Plaintiffs filed an action for, inter alia, an injunction to restrain TCIE from entering into any dealings in relation to the Land, a declaration that the value of the Land is RM55,600,000.00, repayment of the sum of RM22,679,424.94, the return of the vehicles and the sum of RM877,000.00 being compensation paid by the Government of Malaysia for acquisition of part of the Land (“Plaintiffs’ Claim”).

TCMH wishes to announce that on 15 July 2021, the High Court allowed the Plaintiffs’ Claim which includes orders for: -

(i)            the sum of RM22,679,424.94, with interest at the rate of 5% per annum, to be paid by TCIE to the 7th Plaintiff;

(ii)           the return of the land acquisition compensation sum of RM877,000.00 by TCIE to the Plaintiffs;

(iii)          the return of all the buses repossessed by TCIE from the Plaintiffs and granted costs in the sum of RM80,000.00, subject to allocatur, to be paid by TCIE to the Plaintiffs.

Based on the advice of its solicitors, TCIE is of the view that there are reasonable grounds to appeal against the High Court Judgment of 15 July 2021 to the Court of Appeal. TCIE has instructed its solicitors to file a Notice of Appeal and apply for a stay of execution of the Judgment of the High Court.

Should TCIE fail in its contestation of the case, TCMH is of the opinion that the Group is able to fulfill the commitment to the abovementioned claim and does not expect any significant impact on the net assets per share of the Group.

Further announcements will be made from time to time in respect of any material developments on this matter.

This announcement is dated 19 July 2021.