Aspen to pay RM40 million to contractor Tialoc in global settlement

ASPEN Group : 1F3 0% has reached a global settlement with Tialoc Malaysia to pay the contractor a settlement of RM40 million (S$11.4 million), putting an end to a months-long dispute between the two.

The amount is below the contractor’s initial RM78 million claim filed in August last year for alleged outstanding sums plus financing charges.

To recap, the group’s indirect subsidiary Aspen Glove on Aug 28, 2023, received a writ of summons endorsed with a statement of claim filed by contractor Tialoc in the Penang High Court.

The writ named Aspen Group, Aspen Glove’s directors, Aspen Vision All and KHTP Assets as co-defendants. Tialoc also alleged that the co-defendants are liable for fraudulent trading and the alleged debts owed by Aspen Glove.

At the time, Aspen Group said that it “vehemently” denied any allegation of fraudulent trading and was seeking legal advice from its solicitors with a view to “vigorously resist and/or defend the suit”.

On Monday (Apr 1), the mainboard-listed company said it intends to fund the RM40 million settlement with sale proceeds from a piece of land held by its indirect subsidiary, Aspen Vision Development (Central), for a minimum selling price of RM75 million.

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The amount may also be funded through the group’s internal resources in the case of no potential purchaser.

Under the settlement agreement, Tialoc “shall use its best effort to identify a suitable purchaser” for the land, and will be entitled to 53 per cent of its sale proceeds, or about RM39.8 million based on the minimum selling price.

The RM75 million selling price may be reduced to RM67.5 million after six months from the date of the settlement agreement.

Should the land remain unsold within 12 months of the agreement and should either party disagree on selling the land at RM67.5 million, Aspen may be required to pay Tialoc 53 per cent of the reduced selling price. Alternatively, Tialoc may purchase the land from Aspen at 47 per cent of the reduced price.

The land’s potential disposal will be contingent on a sale and purchase agreement (SPA) between Aspen Vision Development (Central), the potential purchaser, or Tialoc or its nominees.

Aspen Vision Group – which holds a 45.75 stake in Aspen Group – and another shareholder Intisari Utama with a 0.95 per cent stake, have provided irrevocable undertakings to approve the potential disposal of the land at an extraordinary general meeting which will take place once the SPA is entered into.

In July 2023, Aspen Group received an adjudication decision that required Aspen Glove to pay a separate RM84.4 million claim by Tialoc. Aspen Glove filed applications to stay and set aside the legal decision.

The group in its Monday announcement said it would assign all rights, benefits, title and interests in this sum – together with financing and other charges payable by Aspen Glove to Tialoc – to its direct subsidiary, Aspen Vision All.

This would give Aspen Vision All “the absolute right to deal with the debt as it deems fit”.

Based on the last audited financial statements of Aspen for the financial year ended Jun 30, 2023, and assuming that the settlement agreement had been completed on Jul 1, 2022, Aspen’s loss per share for FY2023 would have been 0.15 sen instead of 0.18 sen.

Had the agreement been completed on Jun 30, 2023, the group’s net tangible assets per share would have stood at 20.24 sen instead of 17.61 sen.

Shares of Aspen were unchanged at S$0.043 as at 9.17 am on Monday, after news of its settlement agreement with Tialoc.