Parkson Cambodia ordered to pay US$144m rental fee in lease dispute

KUALA LUMPUR: Singapore-listed Parkson Retail Asia Ltd's (PRA) Cambodian unit has been ordered to pay US$144.50mil as damages to Hassan (Cambodia) Development Co., Ltd as rental fee over the whole period of the lease under the agreement.

The unit, Parkson (Cambodia) Co. Ltd’s security deposit and all advanced rental payments paid to Hassan (Cambodia) amounting to US$4.48mil will also be forfeited.

This was based on a statement issued by PRA, a 67.96% owned subsidiary of Parkson Holdings Bhd. Parkson Holdings issued PRA's statement to Bursa Malaysia on Monday.

On April 22, the Phnom Penh Court granted judgement against Parkson Cambodia and ordered the forfeit and payment of damages.

Parkson Cambodia is a unit of PRA, which is listed on the SGX-ST.

PRA had in November 2018 and October 2019 announced that it had issued a notice of arbitration to Hassan (Cambodia) under the Singapore International Arbitration Centre (SIAC) over the lease.

PRA had earlier announced that in its unaudited financial statements for the fourth quarter and 12 months ended June 30,2019 released on Aug 27,2019 about the dispute which was pending arbitration under the SIAC.

Hassan (Cambodia) had on Dec 12,2018 filed a petition in the Phnom Penh Municipal Court of First Instance.

“Prior to the judgement, Parkson Cambodia had filed an appeal motion to the Cambodian Appellate Court to transfer the jurisdiction of the Phnom Penh Court to hear Case No. 2577 to SIAC Arbitration jurisdiction. The appeal motion is currently pending in the Cambodian Appellate Court, ” PRA said.

Parkson Cambodia is currently seeking advice from its Cambodian lawyers whether to petition to set aside the judgement, to appeal to the Cambodian Appellate Court or if other forms of recourse are available.

“The PRA Group’s maximum potential exposure resulting from the judgement will therefore be limited to its capital contribution in Parkson Cambodia which had been fully provided for in the audited financial statements of PRA for the financial year ended June 30,2017.

PRA Group had in its audited financial statements for the financial years ended June 30,2016,2017 and 2018 recognised the impairment losses in connection with, inter alia, the full amounts of prepaid rental, rental deposit and property, plant and equipment in respect of the Cambodia store.

“Accordingly, the judgement, even if not successfully reversed or appealed against by Parkson Cambodia, is not expected to have a material impact on the earnings per share and the net tangible assets per share of the PRA Group for the financial year ending June 30,2020, ” PRA said.