Sarawak Consolidated Industries Bhd has terminated its share sale agreement (SSA) to acquire the owner and operator of an industrialised building system (IBS) factory Carlton Gardens Sdn Bhd for RM9.5 million. In return, it is claiming for yet-to-be-quantified losses and damages suffered due to what it alleged were the sellers' breach of contract and/or misprepresentation.
The group said in a filing with Bursa Malaysia on Tuesday (24 April) that it had issued a notice of termination on April 19 to the sellers Gaya Belian Sdn Bhd, Brian Francis Ticcioni and Asgari Mohd Fuad Stephens. The agreement was inked on Dec 28, 2016, under which the purchase consideration was paid in a combination of cash and new Sarawak Consolidated shares.
Following the termination, Sarawak Consolidated said the sellers also have to refund the purchase consideration it has paid, together with all other monies paid to the sellers or on the sellers' behalf to any third party or parties. This includes payments made under four separate agreements for asset purchase, management, sub-contract and lease in November 2016, the group listed in a statement with the stock exchange today.
Further, the sellers have to re-transfer all of the shares allotted to them within 14 days from the date of the termination notice, said Sarawak Consolidated, adding it would cease to be liable for all obligations and liabilities under other related agreements.
Sarawak Consolidated said its solicitors are of the view that the sellers had breached the contract and that the group was therefore entitled to terminate or void the contract for misrepresentation.
"As a result, (we believe) that there is a good chance that all the costs can be recovered. Hence, the termination of the SSA is not expected to have any material impact on the group's financial position" Sarawak Consolidated said.
When Sarawak Consolidated proposed to acquire Carlton Gardens in 2016, it said the latter had secured work for the Beaufort 1Malaysia People's Housing Programme (PR1MA) affordable housing projects, which would be developed over 20 years.
Shares in Sarawak Consolidated slid 3 sen or 5% to close at 57 sen today, giving the group a market capitalisation of RM48.95 million.