JAKS loses lawsuit against Star Media; Court orders banks to release RM50m bank guarantee

KUALA LUMPUR (July 12): The High Court has ordered the two issuing financial institutions to release a RM50 million bank guarantee called on by Star Media Group Bhd in February, in relation to an agreement for the purchase of a piece of land in Section 13, Petaling Jaya for RM135 million.

This means JAKS Resources Bhd will have to pay the RM50 million sum to the two issuers.

In a filing with Bursa Malaysia, Star Media said the High Court has today dismissed the legal suit filed by JAKS to restrain the financial institutions from releasing the bank guarantee to Star Media, with costs.

The financial institutions are required to release the bank guarantees to Star Media within five working days.

To recap, the bank guarantee was made as security to ensure JAKS Island Circle Sdn Bhd (JIC) — a 51%-owned unit of JAKS — completes and delivers a 15-storey office block called Tower A, to be constructed on the land, within three years from the vacant possession date or the date of approval of the plans for the tower.

The RM50 million bank guarantee comprises guarantees of RM25 million each from two financial institutions. One guarantee expired on Feb 15, while the other expired on April 15.

Star Media has been entangled in a legal row with JAKS after the media company attempted to make a call on the RM50 million bank guarantee in February when JAKS failed to deliver Tower A on the stipulated date. It was reported that the delivery of the building had been delayed by 28 months. JAKS responded by obtaining an interim stay to freeze the bank guarantee.

Star Media shares closed unchanged at RM1.06 today, for a market capitalisation of RM782 million. JAKS shares also closed unchanged at RM1.28, valuing it at RM698 million. — theedgemarkets.com

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