JAKS gets interim stay blocking release of bank guarantee to Star Media

KUALA LUMPUR (Feb 27): JAKS Resources Bhd’s subsidiary has obtained an interim stay, restraining two banks from releasing guarantee proceeds totalling RM50 million to Star Media Group Bhd.

JAKS said the stay order, granted to 51%-owned subsidiary JAKS Island Circle Sdn Bhd (JIC), would last until the High Court hears the inter-parte injunctions — which will see both sides presenting their arguments — on March 7.

In a statement, JAKS said the interim stay was issued during a case management at the court yesterday.

“Status quo of the bank guarantee thus remains, pending the hearing, which had been fixed on March 7,” the statement added.

JAKS said JIC maintains its earlier views that the call on the bank guarantee by Star Media on Feb 15 is baseless, and that the subsidiary has valid and sufficient grounds to support that.

Pending the court’s decision on the injunction, JAKS said the ongoing operations of the group and JIC itself, including the on-site development of Pacific Star project, will remain unaffected and will progress on schedule.

“JAKS and JIC have sufficient financial resources and capabilities to ensure the completion and delivery of the Pacific Star project.

“The project has obtained adequate financing facilities from financial institutions and JAKS in a strong financial position to support, following the asset disposals (as announced in 2017) that strengthen the company’s balance sheet,” JAKS said.

Pacific Star is a project comprising Tower A, an office block of 15-storey building, a 13-storey office suites building (Tower B), two 24-storey residential blocks (Tower C and E), a 15-storey residential block (Tower D), four levels of basement car parks, as well as a Podium which consists of car parks, office suites and a four-storey commercial centre known as Pacific Star Business Hub.

On Aug 19, 2011, JIC had executed the sale and purchase agreement with Star Media to acquire a leasehold land located at Section 13, Petaling Jaya from Star for a consideration of RM135 million to be satisfied via cash and in kind with the delivery of Tower A.

The SPA terms stated JIC is to provide a RM50 million irrevocable and on demand bank guarantee in favour of Star Media guaranteeing the completion and delivery of Tower A to the latter within three years from vacant possession date or three years from the date of the approval of the agreed plans for Tower A, whichever is later.

“Since the execution of the SPA, Star Media had in the course of JIC’s development and execution of Tower A, instructed various changes to be made on Tower A that had prevented JIC from completing Tower A,” the statement said.

“Hence, JIC is of the view that it should have been given extension of time to complete Tower A. Furthermore, any interest claim by Star Media is not right and invalid, as the completion time should have been extended,” JAKS added in its statement.

Despite Star’s actions, development of Tower A has made significant progress with completion progress at 95.6%, JAKS said.

“The advanced development progress of Tower A is also reflected in the remaining components within the Pacific Star project, whereby the development has achieved good progress,” it added.

JAKS’ share price gained eight sen or 4.73% to close at RM1.77 yesterday, giving it a market capitalisation of RM876.11 million.

Meanwhile, Star Media closed three sen or 2.24% lower at RM1.31 yesterday, valuing the group at RM966.62 million. — theedgemarkets.com

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