Bursa Announcements

Tan Chong Motor Holdings Berhad (“TCMH” or “Company”) wishes to announce that ETCM (C) Pty Ltd (“ETCM (C)”) and Tan Chong Motor (Cambodia) Pty Ltd (“TCMC”), both wholly-owned subsidiaries of TCMH, had on 9 May 2017 via their solicitors filed a defence on a Motion to Add and Correct Complaint against Narita Motorcare (Cambodia) Co. Ltd (“Narita”), Mr Long Narith and Mrs Pich Sokhom, the representatives of Narita.

Background

As announced by the Company on 11 March 2010, ETCM (C) had, on the same day, entered into a Distribution Agreement with Nissan Motor Co. Ltd (“Nissan”) in respect of the sole and exclusive right to distribute Nissan completely built up vehicles in Cambodia. ETCM (C) took over the Nissan distributorship from the then distributor, Kjaer Group based in Denmark and who had appointed Narita as its non-exclusive dealer for Nissan vehicles in Cambodia.  

Following this, TCMC is appointed to undertake the distribution of the Nissan vehicles in Cambodia including the right to appoint dealers to sell the Nissan vehicles. ETCM (C) then went into negotiation with Narita with a view to appoint Narita as a non-exclusive dealer in Phnom Penh, Cambodia.

Narita however contended that in practice, they have always been allowed by Kjaer Group to play the role of sole distributor of Nissan vehicles in the whole of Cambodia with a right, amongst others, to import Nissan vehicles into Cambodia. The negotiation has gone on for years when Narita filed a motion for a Preservative Relief Order in July 2015 for the protection of its purported sole distributorship status (“2015 Preservative Relief Order”). On 12 September 2016, the Court of Appeal on an Appeal Motion by ETCM (C) and TCMC, made the ruling in the favour of ETCM (C) and TCMC. The Ministry of Commerce of Cambodia had also via its letter dated 23 December 2015 recognised the exclusive rights of TCMC to distribute Nissan vehicles in Cambodia.

Motion to Add and Correct Complaint

On 26 April 2017, Narita, Mr Long Narith and Mrs Pich Sokhom had unexpectedly filed a Motion to Add and Correct Complaint and a counter complaint to, amongst others, order ETCM (C) and TCMC to pay damages and compensation of USD6,550,000 to Narita, USD200,000 each to Mr Long Narith and Mrs Pich Sokhom.

Status

On 9 May 2017, ETCM (C) and TCMC, through their solicitors, have jointly filed a 3rd Motion to Correct the Counter Complaint, amongst others, requesting to:

1. dismiss all claims of Narita, Mr Long Narith and Mrs Pich Sokhom;

2. confirm the non-existence of the agreement between Narita and ETCM (C) and TCMC;

3. order Narita, Mr Long Narith and Mrs Pich Sokhom to pay ETCM (C) and TCMC damages totalling approximately USD33,000,000 for actual losses and emotional damages which have been caused by the rulings arising from the 2015 Preservative Relief Order.

Financial and Operational Impact

Based on the advice of the solicitors, ETCM (C) and TCMC are of the view that they have a legitimate defence against the claims. 

Should ETCM (C) and TCMC fail in their contestation of the claims, TCMH is of the opinion that the Group is able to fulfill the commitment to the abovementioned claims. The net asset per share of the Gorup will be reduced by 4.6 sen. There is no impact to ETCM (C) and TCMC’s business operation in Cambodia.

Other than the above, TCMH is of the opinion that the claims have no other significant financial impact to the Group for the current financial year.

Further announcements will be made from time to time in respect of any material developments on this matter.

This announcement is dated 15 May 2017.