Benalec  Holdings  (BHB)  announced  that  its  wholly-owned  subsidiary, Benalec  Sdn  Bhd  (BSB)  had  on  the  30  April  2015  received  a  Writ  of Summons  and  Statement  of  Claim  dated  21  April  2015  filed  by Sentosacove  Sdn  Bhd  (SSB).  SSB  is  alleging  that  BSB  had  breached  its contractual and implied duties under a reclamation agreement entered into on  10  September  2010.  Under  the  reclamation  agreement,  BSB  was appointed as a  contractor to carry out marine reclamation works to reclaim a  total  area  spanning  720  acres  in  Daerah  Klebang,  Melaka.  SSB  is claiming for, inter alia, a declaration that BSB had breached the reclamation agreement and for other consequential and ancillary reliefs. (Source: Bursa Malaysia)

Comments:  After the civil suit which involved the Leaw brothers as well as certain related companies and which was resolved in 1H14, this new suit by SSB  came  as  a  surprise.  BHB  has  stated  that  SSB’s  claims  are  without merit and that it is rigorously contesting the alleged claims. It has instructed its solicitors to defend the case as well as to file counter claim(s) as shall be necessary  and  justified.  At  this  moment,  BHB  is  unable  to  ascertain  the financial impact arising from the suit.

We await further clarifications by BHB’s management on the suit as well as potential  financial  impact.  At  this  stage,  we  understand  that  works  on  the land reclamation concession has not been affected by the suit. Maintain BUY  rating and TP of RM0.98 for BHB, the prospects of which will strengthen  significantly  when  reclamation  works  on  its  Johor  concessions and land sale begin.

Source: Affin Hwang Capital Research - 8 May 2015