PETALING JAYA: Star Media Group Bhd says it called on bank guarantees amounting to RM50mil after a subsidiary of JAKS Resources Bhd, Jaks Island Circle Sdn Bhd (JIC) failed to complete and deliver a building in a Section 13 Petaling Jaya development in accordance with the deadline.
The company in an announcement said that the deadline had expired on Feb 15 following the latest extension agreed between Star Media Group and JIC.
The building was supposed to have been completed and delivered 28 months ago.
“As JIC had failed to deliver vacant possession of Tower A by the stipulated deadline, the company had in accordance with its rights under the agreement and terms of the bank guarantees pledged as security made a demand on the bank guarantees from the financial institutions,” Star Media Group said.
Star Media Group had on Aug 19, 2011 entered into a sale and purchase agreement (SPA) with JIC, a 51% subsidiary of JAKS, for the disposal of a piece of land in Section 13 for RM135mil. The transaction was to be satisfied via the delivery of a 15-storey office block known as Tower A.
Star Media Group’s announcement came a day after JAKS told the exchange that it was seeking an injunction to stop the media group from calling in on the bank guarantees.
Under the SPA, the bank guarantees were obtained by JIC in August 2011 as security for guaranteeing the completion and delivery of the vacant possession of Tower A on the piece of development.
JIC was supposed to undertake a mixed development project on a piece of land in Section 13. Amongst others, JIC’s obligation was to complete and deliver Tower A within three years from the vacant possession of the land, or three years from the date of approval of the agreed plans for the tower block.
According to JAKS, the bank guarantees of RM50mil were from two financial institutions. One expired on Feb 15 and the other is due to expire on April 15.
Star Media Group had given notifications to the financial institutions on Feb 15 to call on them. JAKS said that its subsidiary was informed of the call on bank guarantees on Monday and instructed its solicitors to file an injunction with the High Court – either on an ex-parte or inter-parte basis as directed – to restrain the two financial institutions from releasing and the Star Media Group from receiving the proceeds of the bank guarantees.
If the bank guarantees are cashed in, then JIC is obliged to pay the financial institutions the sum of RM50mil.