Minimal impact to Homeritz from civil proceedings

KUCHING: Homeritz Corporation Bhd’s (Homeritz) subsidiary had initiated civil proceedings against Khazanah Realty Sdn Bhd (Khazanah Realty) in relation to the sale and purchase of two pieces of lands, Lot No. 11722 and Lot No. 11723, both in Mukim Parit Bakar, District of Muar, Johor.

The civil proceedings claim that Khazanah Realty is not entitled to terminate the sales and purchase agreement (SPA) and that Khazanah is prohibited from selling the lands in the SPA.

The agreement to purchase the lands was entered into between Embrace Industries and Khazanah Realty on February 1, 2021 for a purchase price of RM5.7 million subject to the fulfilment of three conditions within three months with extension of two months – meaning by June 30, 2021. The conditions were to obtain approval to construct the public infrastructure, factory building, planning permission and the building plan; to obtain certification from the licensed architect that the construction of the public infrastructure for Lot 11723 has been commenced; and to obtain the consent of the state authority to transfer Lot 11722 from Khazanah Realty to Embrace Industries.

However, Embrace Industries was unable to fulfil the first two conditions by the deadline due to Khazanah Realty’s refusal and failure to assist Embrace Industries in the applications by delaying and refusing to execute and sign the necessary documents. The reason Embrace Industries filed for the civil proceedings was mainly to prohibit Khazanah from terminating the SPA – on the basis that the conditions were not met by the deadline – and selling the lands to other buyers.

Hong Leong Investment Bank Bhd (HLIB Research) did not expect any material financial, operational and reputational impact arising from this litigation for Homeritz. “Homeritz does not expect any financial impact to from the civil proceedings other than the legal cost incurred. The proceedings also should not have any impact on its ongoing business operations,” it opined yesterday.

“We also do not think that this will adversely impact the reputation for Homeritz as this is a proceeding initiated by Homeritz’ subsidiary with the intention to secure the lands. We will continue to monitor development of this matter.”

HLIB Research was positive on the outlook of the company supported by its current strong order book, its position as an original design manufacturer, improved capacity contributed by its new factory as well as its better production efficiency; and sustainable strong furniture demand.