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Darco to exercise reversal option to scrap controversial Nambo deal
THE board of Darco Water Technologies on Monday said it has directed its management to exercise the reversal option for the Nambo project, and to take the "reasonably necessary" steps to recover the investment made and costs incurred in connection with the conditional sale-and-purchase agreement that it had signed last November.
This was in light of the seller Emsus Co's letter informing the company that the West Java government was not agreeable to re-negotiating the terms of the cooperation agreement.
The acquisition target company, PT Jabar Bersih Lestar (JBL), has a cooperation agreement with the West Java province regional government of Indonesia to provide waste-management services in Bogor City, Bogor Regency and Depok City in Indonesia.
JBL had previously made a formal submission to the West Java government, asking for the re-negotiation of, and modifications to, some terms of the cooperation agreement, following recommendations by the consultant, but the West Java government were not agreeable.
Despite the seller Emsus Co's further efforts to engage with the West Java government to make the project viable, it held its ground.
Accordingly, Darco will thus proceed to issue a notice to the seller to exercise the reversal option. Under the terms of the signed agreement, the completion of the repurchase of the sale shares by the seller is expected to take place within 14 days once the notice is served.
The reversal option will enable Darco to reverse and unwind the sale and purchase of the sale shares, and sell them back to the seller. In return, the seller will pay Darco US$300,000 and US$400,000, being the sum of the advance payment and first payment, respectively. The target company will also pay Darco US$600,000, being the sum of the second payment.
Shares of Darco closed flat at S$0.16 on Monday before it made this announcement.