Ho Hup wins suit, court declares deal null and void, firm can revamp

I highlighted the dispute of the Ho Hup Constructions Co Berhad , three (3) months ago. Now at last the court decided the deal was null and void. Ho Hup Constructions can proceed with the revamp plan. I believe justice always prevail.

PETALING JAYA: After more than a year of litigation, the Kuala Lumpur High Court has finally ruled in favour of Ho Hup Construction Co Bhd by declaring null and void a joint development agreement (JDA) between the latter's 70%-owned subsidiary, Bukit Jalil Development Sdn Bhd, and Pioneer Haven Sdn Bhd, a wholly-owned unit of Malton Bhd.The finalisation of the court decision would enable Ho Hup to proceed with its financial regularisation plan, which had been delayed pending the outcome of the suit.

Ho Hup had been working to regularise its financial condition since being listed as a Practice Note 17 (PN17) company in July 2008.“With the JDA reversed, the full development rights of the valuable, prime piece of land would revert back to our subsidiary Bukit Jalil Development,” Ho Hup executive director Derek Wong said in a statement yesterday.“This means we can fully leverage on this prized asset to restructure the company's debts and regularise our operations and financial condition,” he said, adding that the company would now focus on finalising details of its PN17 regularisation plan and submission to the authorities.


Ho Hup made a requisite announcement of its PN17 regularisation plan in early March 2011 involving the restructuring scheme for creditors for the company as well as that for Bukit Jalil Development. Ho Hup and Bukit Jalil Development reportedly had outstanding debts worth RM329.2mil in the form of secured and unsecured loans as to date.In a filings w ith Bursa Malaysia yesterday, Ho Hup s aid the High Court had found that the company's previous board of directors had acted in breach of their duties to Ho Hup by committing Bukit Jalil Development to the JDA, and that Pioneer Haven had knowingly assisted in those breaches. “Significantly, the High Court found that the JDA, was in substance, a disposal of Bukit Jalil Development's 60-acre land bank, and as such, required the approval of shareholders under section 132C of the Companies Act.

“As no such approval was obtained, the joint development agreement and other associated instruments were null and void for contravening the law,” it said, adding that the High Cour t had ordered the private caveat lodged by Pioneer Haven be expunged.Ho Hup entered into the JDA (via Bukit Jalil Development) with Pioneer Haven on March 16 last year, when Ho Hup was still under the management of former deputy chairman Datuk Vincent Lye.The deal was supposed to see the partners jointly develop the freehold land in Bukit Jalil into a mixed commercial and residential project.

Substantial shareholder Datuk Low Tuck Choy, who was also a former managing director of Ho Hup, as well as several other shareholders, had objected to the deal, claiming that their approval was not sought.
Shareholders who objected the deal also believed that it would be more profitable to Ho Hup if the company had opted to sell or develop the land on its own.Now that the JDA has been declared null and void, Ho Hup indeed would have the option to develop Bukit Jalil on its own.

According to Wong, the masterplan to develop the Bukit Jalil site into a mixed commercial and residential proje ct had been conditionally approved by City Hall.“The land is within a prime location and will be developed in six phases over 10 years with an estimated gross development value of RM4.2bil,” he said in the statement.
“We are looking at a sales launch, possibly in the fourth quarter.”


Source : http://biz.thestar.com.my/news/story.asp?file=/2011/6/8/business/20110608082143&sec=business