Jaks seeks to stop Star Media from claiming RM50m bank guarantee

PETALING JAYA: Jaks Resources Bhd’s (JRB) sub-subsidiary Jaks Island Circle Sdn Bhd (JIC) has instructed its solicitors to file with the High Court an injunction to stop Star Media Group from claiming a bank guarantee of RM50 million provided for under a joint development project in Section 13, Petaling Jaya.
In August 2011, JIC, which is 51% owned by Jaks Sdn Bhd a wholly owned subsidiary of JRB, acquired land in Section 13, Petaling Jaya, from Star Media for RM135 million.
As security for the performance of JIC’s obligations under the sale and purchase agreement, JIC provided inter-alia, an irrevocable and on demand bank guarantee in favour of Star Media for the sum of RM50 million guaranteeing the completion and delivery of vacant possession by the purchaser of Tower A within three years from the vacant possession date or three years from the date of approval of the agreed plans for Tower A, whichever is later.
“The board of directors of JIC are of the view that the call on the bank guarantee is baseless and JIC has valid grounds for the High Court to grant the injunction as Star has in the course of JIC’s execution of Tower A prevented the completion and thus JIC should have been given extension of time to complete Tower A,” JRB said.
The bank guarantee of RM50 million that has been made available to Star Media is from two financial institutions, each for RM25 million, which are expiring on Feb 15, 2018 and April 15, 2018 unless an extension is granted by Star.
“Star Media has not granted an extension for the bank guarantee and has given notification to the two issuing financial institutions on Feb 15, 2018 to call on the bank guarantee. JIC was notified on Feb 19, 2018 of such call. In accordance with the terms of the facilities, JIC will have to pay the financial institutions, the sum of RM50 million,” JRB said in a stock exchange filing yesterday.
JIC seeks to restrain the issuing financial institutions of releasing, and Star Media from receiving, the proceeds.
It added that the injunction does not affect the ongoing business operations of JIC or JRB Group.