Affin Holdings Berhad ("AHB" Or "company")

AHB had previously announced on 30 August 2000 the execution of the Acquisition of Business Agreement on even date (the “Acquisition Agreement”) entered between AHB, ABB, Bank Simpanan Nasional (“BSN”) and BSNC in respect of the acquisition by ABB of the assets and liabilities of BSNC (“Acquisition of BSNC”). Pursuant to clause 2.1.5 of Schedule 1 (“Clause 2.1.5”) of the Acquisition Agreement, BSNC had given a warranty that in the event that the amount due from its debtors as at 30 June 2000 (except those reflected as bad and doubtful debts in the audited accounts of BSNC as at 30 June 2000) (“Amounts Due”) were not recovered by ABB in the ordinary course of business within 30 days of completion of the Acquisition of BSNC, BSNC undertook to pay ABB within 30 days from the date of receipt of ABB’s letter of demand, the Amounts Due subject to a limit of 30% of the purchase price of BSNC of RM338.98 million i.e. RM101.69 million. Clause 2.1.5 of the Acquisition Agreement also states that upon receipt of the warranty claims from BSNC, ABB would be obliged to assign all rights whatsoever to sue for and the benefit or interest with regard to the bad debts on which the basis of the claim was made (“106 Accounts”).

In 2005, BSNC had filed an Originating Summon: Suit No. S6-24-1527-2005 (“Suit”) against AHB and ABB. Under the Suit, BSNC had sought a declaratory order that ABB is to assign 106 Accounts representing loans with a face value of RM988 million, with an estimated value after provisions of RM578 million to BSNC pursuant to Clause 2.1.5. The 106 Accounts were not assigned to BSNC as AHB and ABB were of the view that no agreement had been reached between AHB, ABB, BSN and BSNC as to which debts were to be assigned to BSNC and that a full trial would be necessary to resolve the issues. Further, the assignment of the 106 Accounts to BSNC is subject to the approval of Bank Negara Malaysia, the approval of which had not been obtained.

After the hearing of the Suit on 28 April 2008, the High Court had on 6 February 2009 decided that there were numerous disputes of fact, which could only be resolved at a full trial before any final conclusion could be reached. The High Court had ordered a full trial of the matter. As at the date of this announcement, no date has been fixed by the High Court for the trial.

The solicitors handling the above case are of the opinion that the outcome of the Suit is still uncertain at this juncture and it is too preliminary to quantify the financial impact to both AHB and ABB.

Further updates on this case will be announced accordingly.

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