And Dutaland and IOI Both Rescind Their 830 Million Ringgit Deal

Posted last month: Yet Another Multi Million Screw Up From IOI Corp? and And IOI Corp Gave Its 83 Million Reasoning Why It's Cancelling The Deal With Dutaland

On the Edge: IOI Corp, Dutaland rescind RM830m oil palm estate deal

• IOI Corp, Dutaland rescind RM830m oil palm estate deal
  Written by Joseph Chin of theedgemalaysia.com
  Wednesday, 09 November 2011 19:34
  
  KUALA LUMPUR (Nov 9): IOI Corp Bhd and DUTALAND BHD [] have agreed to mutually rescind the sale and purchase agreement over the disputed RM830 million oil palm PLANTATION [] deal.
  
  IOI Corp said on Wednesday that its unit Sri Mayvin Plantation Sdn Bhd and Dutaland’s Pertama Land & Development Sdn Bhd had entered into a deed of rescission in a move to resolve all issues and disputes relating to the SPA that involved 11,977.91 ha (29,597.42 acres).
  
  “With immediate effect whereupon the parties are released from all obligations and liabilities in connection with the SPA and neither party shall have any further claim against the other in respect thereto,” it said.
  
  IOI Corp said following from the execution of the deed of rescission, OSK Trustees Bhd, being the stakeholder jointly appointed by the parties, will proceed to refund the deposit earlier paid by Sri Mayvin pursuant to the terms of the SPA together with all interest accrued thereon to Sri Mayvin.
  
  To recap, on Oct 25, IOI Corp terminated its proposed acquisition of the land from Dutaland, citing the cancellation was “due to non-compliance of certain terms and conditions”.
  
  However, in a separate statement, Dutaland said it did not accept the reasons for termination of the sales and purchase agreement and directed the stakeholder, OSK Trustees Bhd not to remit the deposit of RM83 million, which was the 10% deposit paid.

Huh?

That's it?

WTH!

Comeon... this is a 830 million ringgit transaction. Surely, both companies have a duty to show some respect to the investing public by explaining why the deal was rescinded. Mind you, when the deal was first announced, Dutaland shares soared. The investing public chased the stock because they speculated that there could be a potential cash windfall arising from this sales and purchase agreement. And Dutaland minority shareholders would like to know why the company is NOT fighting for the 83 million deposit paid.

Here's Dutaland announcement on Bursa.

• We refer to the announcements made by the Company dated 28 July 2011, 26 September 2011, 11 October 2011, 25 October 2011 and 27 October 2011, in relation to the Proposed Disposal. (Unless otherwise defined, all terms used in this announcement shall have the same meaning ascribed to them in the aforementioned announcements)
  
  The Board of Directors of the Company (“Board”) wishes to inform that the Company’s wholly-owned sub-subsidiary, Pertama Land as Vendor and Sri Mayvin as Purchaser have, on 9 November 2011, entered into a Deed of Rescission (“Deed”) to rescind the SPA and to record the arrangements consequential to the rescission (“Rescission”). Pertama Land had vide its letter dated 25 October 2011 disputed Sri Mayvin’s termination of the SPA on 25 October 2011. The primary objective of the Deed is to resolve all issues and disputes relating to the termination of the SPA by Sri Mayvin.
  
  The salient terms of the Rescission are as follows: -
  
  1. With the execution of the Deed, the SPA has been rescinded whereby both Pertama Land and Sri Mayvin have been released from all obligations and liabilities in connection with the SPA and neither party shall have any claim against the other in respect thereof.
  
  2. With the Rescission, Sri Mayvin has retracted all its allegations and assertions made against Pertama Land as contained in Sri Mayvin’s letters dated 4 October 2011, 20 October 2011 and 21 October 2011.
  
  3. Pursuant to the Deed, Sri Mayvin has further confirmed that it has not lodged and will not lodge any private caveat(s) or any encumbrances(s) over the Properties.
  
  4. The Stakeholder shall, simultaneous with the execution of the Deed, refund the Deposit of 10% of the Sale Consideration amounting to RM83 million together with all interest accrued thereon to Sri Mayvin.
  
  The Board having sought legal advice and after taking into consideration all relevant aspects of the termination of the SPA, is of the view that protracted litigation would hinder any future sales of the Properties. Furthermore, the outcome of litigation can be uncertain and this may have adverse implications on the Group.
  
  In the meantime, the Group shall continue to manage the Properties to generate positive returns.
  
  After considering the above, the Board is of the view that the Rescission is in the best interest of the Company.
  
  The Rescission is not expected to have a material effect on the earnings, net assets and gearing of the Company and the Group for the financial year ending 30 June 2012 as well as the issued and paid up share capital of the Company and the shareholdings of the Company’s substantial shareholders.

What's the main reason to rescind?

Why the lack of transparency?

This is from IOI.

• Reference is made to the Company’s announcements dated 25 October 2011 and 27 October 2011 relating to the termination of sale and purchase agreement ("SPA") entered into between Sri Mayvin Plantation Sdn Bhd (“Sri Mayvin”) and Pertama Land & Development Sdn Bhd (“Pertama Land”) for the Proposed Acquisition.
  
  To resolve all issues and disputes relating to the termination of the SPA, both Pertama Land and Sri Mayvin have on 9 November 2011 entered into a Deed of Rescission to mutually rescind the SPA with immediate effect whereupon the parties are released from all obligations and liabilities in connection with the SPA and neither party shall have any further claim against the other in respect thereto.
  
  Following from the execution of the Deed of Rescission, OSK Trustees Berhad, being the stakeholder jointly appointed by the parties, will proceed to refund the deposit earlier paid by Sri Mayvin pursuant to the terms of the SPA together with all interest accrued thereon to Sri Mayvin.
  
  This is announcement is dated 9 November 2011.

Just like that?

Case closed?

Here's Dutaland chart...

See how Dutaland, with the announcement of this 830 million transaction, soared from 50 sen to a high of 68 sen?

Yeah, see how Dutaland crash and burned once IOI said it was pulling out from this deal?

How?

Is this acceptable?

Look at the bigger picture. One of the bigger Malaysia corporate signed a S&P to make a 830 million land purchase. Deposit is even paid but yet..... such a deal can have be 'GOSTAN-ED' ..........

If this is going to be the normal practice amongst corporate Malaysia, can you wonder the future of investment in Malaysia stocks? How's Malaysia going to attract foreign investors when our corporations behave so unprofessional? One buys and signs the agreement but the next minute, the agreement is cancelled.

Yeah and what good is signing an S&P?

Could investors trust the signing of any S&P in the future when IOI and Dutaland have shown how easily the S&P could be rescinded?

WTH!

Ok, assuming IOI reasoning to withdraw from the deal is valid. However, the main question is why didn't IOI make a thorough inspection before they sign the S&P? Why sign and pay deposit then only say they want to withdraw? Very unprofessional isn't it? And they put their 83 million deposit at risk.