PETALING JAYA: Khee San Bhd (KSB) and its wholly owned subsidiary Khee San Food Industries Sdn Bhd (KSFI) have been served a legal suit by Bank Of China (Malaysia) Bhd (BOC) for a default in loan repayment amounting to RM14.62 million.
BOC’s claims against KSFI and Khee San are RM14.62 million as at July 30, 2019; interest on the sum of RM14.62 milion at the rate of 1.25% per annum; costs against KSFI on a solicitor and client basis; costs against Khee San on a full indemnity basis; and such further or other relief.
However, the company said in a stock exchange filing that BOC has committed breach of conduct, as Khee San and KSFI are in the midst of talks with bankers, including BOC, on a proposed financial exercise.
Khee San had in July received two notices of demand (NOD) respectively through BOC’s solicitors Messrs Skrine & Co as the corporate guarantor for payment owing by KSFI for RM11.7 million.
“However, upon receiving the above NODs, Khee San has immediately engaged with BOC through active dialogue sessions and direct meetings with BOC officials. The management of Khee San has also been actively negotiating with BOC on the terms of repayment and the possibility of converting the facilities owing to BOC into term loan. There have been legal correspondences between KSB’s solicitors and BOC and its solicitors in June and July 2019,“ said Khee San.
The company will file a memorandum of appearance on Aug 13 and case management has been fixed on Aug 15 for further directions from the court.
Khee San said it intends to reschedule the facilities by terming out the short-term obligations to ease the repayment for the company and has been in discussions with the bankers on a proposed financial exercise.
“Both Khee San and KSFI have engaged with BOC as well as other lenders with the last meeting on Aug 2, 2019 where parties discussed the terms of repayment and possibly to reschedule these facilities from short term to long term. It was agreed that a follow-up meeting will ensue to term out the facilities subject to the cash flows of the Khee San and KSFI.”
The meeting concluded with all parties, including BOC representatives, agreeing to a follow-up meeting to reach an amicable solution and to finalise detailed terms of repayments. Khee San was to come up with a cash flow projection to meet the repayment obligations of the proposed rescheduling of the facilities.
“It’s the opinion of the company that BOC should not have proceeded with legal proceedings against KSFI and Khee San to recover the outstanding amounts. The writ of summons (filed on Aug 1, 2019) was in fact filed prior to the meeting held with the bankers (on Aug 2, 2019) while BOC kept silent on the filing of the writ throughout the meeting, and in fact misled Khee San and KSFI,“ Khee San said.
KSFI and Khee San have appointed solicitors to deal with the matter prior to the default, who were also present at the meeting, and a formal letter describing this has been sent by the company’s lawyers to Skrine & Co stating the grounds of this mala fide conduct and a breach of the rules governing bankers’ fiduciary responsibilities to their customers, KSFI and Khee San included.
“It is the opinion of the company’s lawyer that the company has a good defence and has advised the company to take all measures including lodgement of necessary complaints to the banking authorities on the breach of conduct of BOC.”
KSFI and Khee San are actively engaging all its bankers and will submit a comprehensive proposal to reschedule the loan facilities in due course. It does not expect any significant impact from the default in payment.