Coastal Contracts starts arbitration against guarantors of aborted JSK Gas deal

PETALING JAYA: Coastal Contracts Bhd has started arbitration proceedings against guarantors of a deposit sum given under a memorandum of understanding (MoU) with PT. Jaya Samudra Karunia Internasional (JSK) for the acquisition of a 49% interest in PT. Jaya Samudra Karunia Gas (JSK Gas) to recoup US$3.85 million (RM15.7 million) owing to the group, more than a year after the agreement was terminated.

At the time JSK Gas was the 99% owner of PT Benoa Gas Terminal, a LNG regasification service provider.

Coastal said it filed an arbitration petition against an individual and a company, a company and two individuals, for breach of the MoU signed between Coastal, the sellers and the company, and breach of two deeds of personal guarantee executed by the guarantors in favour of Coastal.

Following the MoU, Coastal lodged a refundable deposit in an amount of US$6 million with the sellers and/or the company on Aug 9, 2016. After the MoU was terminated on Oct 28, 2016 Coastal was entitled to a refund of the full deposit.

"The guarantors were to guarantee the refund by the sellers and/or the company of the deposit, and/or undertook to refund to Coastal the deposit. However to-date, the respondents have failed to fully refund Coastal the deposit and there is still an outstanding of US$3.85 million due and owing to Coastal, excluding interest and costs," Coastal said in a stock exchange filing.

Apart from the amounts claimed by Coastal, the arbitration proceedings are not expected to have any other potential financial impact on Coastal, its subsidiary(ies) and/or Coastal’s group of companies.

Coastal said it has engaged external legal counsel to represent and assist it in the arbitration proceedings and will announce any further developments on the arbitration proceedings at the appropriate time.

"As the rules applicable to the arbitration proceedings include provisions for the confidentiality of the arbitration proceedings, Coastal is unable to disclose any further information with regard to the arbitration proceedings at this stage."

Coastal closed 2.33% higher at RM1.32 with 40,400 shares traded.