Bursa Announcements

The Board of Directors of TCMH wishes to announce that Tan Chong Industrial Equipment Sdn. Bhd. (“TCIE”), a wholly owned subsidiary of the Company, had on 15 August 2017 received a sealed Writ of Summons dated 12 August 2017 and Statement of Claim dated 11 August 2017, a sealed copy of a Notice of Application for Injunction dated 12 August 2017 and supporting Affidavit dated 11 August 2017 (“the action”) from the solicitors acting for Transnasional Express Sdn. Bhd. (“Transnasional”), Plusliner Sdn. Bhd. (“Plusliner”), Syarikat Kenderaan Melayu Kelantan Berhad (“SKMK”), Syarikat Rembau Tampin Sdn. Bhd. (“SRT”), Kenderaan Langkasuka Sdn. Bhd. (“Langkasuka”), Konsortium Transnasional Berhad (“KTB”) and MHSB Properties Sdn Bhd (“MHSB”) (collectively known as “Plaintiffs”).

Background

TCIE had entered into a series of lease agreements with Transnasional, Plusliner and SKMK and a series of service maintenance agreements with Transnasional, Plusliner, SKMK, SRT and Langkasuka  (collectively known as “Debtors”) for the lease and service maintenance of the vehicles. The Debtors were owing to TCIE outstanding rentals and service bills amounting to RM32,920,575.06 (“Debt”).

TCIE had negotiated with the Debtors on the settlement of the Debt on many occasions and after lengthy negotiations, the Debtors and KTB had mutually agreed  to enter into a Settlement Agreement with TCIE on 4 July 2016 to settle the same by way of (i) repayment of the amount of RM16,920,575.06 in cash in several instalments; and (ii) transfer of a piece of land held under H.S.(D) 87546, PT No. 7929, Bandar Ampang, Daerah Ulu Langat, Negeri Selangor (“Land”) owned by MHSB to TCIE for the settlement of the balance Debt of RM16,000,000 (“Balance Debt”) (“Settlement Agreement”).

Simultaneously with the Settlement Agreement and as settlement of the Balance Debt, TCIE entered into a Sale and Purchase Agreement with MHSB and Nadicorp Holdings Sdn Bhd for the acquisition of the Land at a mutually agreed consideration of RM16,000,000.

However, the Debtors had failed to make timely repayments of the Debt in accordance with the Settlement Agreement  hence, TCIE had exercised its contractual rights to repossess the vehicles leased to the Debtors.

Claims

Pursuant to the action, the Plaintiffs are claiming, amongst others, the following:-

(a)          an injunction to restrain TCIE from repossessing and disposing the vehicles the subject of a Settlement Agreement between the Plaintiffs and TCIE until disposal of the action;

(b)          an injunction to restrain TCIE from entering into any dealing in relation to the Land and a declaration pertaining to the value of the Land of MHSB  is RM55,600,000.00;

(c)           an injunction to restrain TCIE from taking any enforcement action under the Settlement Agreement between the Plaintiffs and TCIE until disposal of the action;

(d)          Repayment of compensation from the acquisition of part of the Land; and

(e)          Repayment of the sum of RM22,679,424.94.

The High Court of Malaya at Kuala Lumpur has fixed the injunction application for hearing on 23 August 2017.

TCIE’s solicitors are of the opinion that the action is without any legal basis and TCIE has instructed its solicitors to file an application to strike out the action.

Financial and Operational Impact

The financial and operational impact of the Writ of Summons and Statement of Claim on TCIE is RM22,679,424.94, being the amount claimed as per the Writ of Summons and Statement of Claim. Should TCIE fail in its opposition of the claim, TCMH is of the opinion that the Group is able to fulfill the commitment to the abovementioned claim and there is no impact to TCIE’s business operations.

Other than the above, TCMH is of the opinion that the claim has no other significant financial and operational 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 18 August 2017.