Star Media, JAKS ink settlement to end six-year dispute over Section 13 land deal

• With the settlement agreement, the parties have agreed to withdraw legal proceedings and any counter claim against each other, with no liberty to file afresh. Star Media will also be allowed to recognise the bank guarantee of RM50 million it called in February 2018 as "other income".

KUALA LUMPUR (Nov 4): The six-year dispute between Star Media Group Bhd (KL:STAR) and property developer JAKS Resources Bhd (KL:JAKS) over the development of a parcel of land in Section 13, Petaling Jaya, which started in 2018, has come to an end, with both parties inking an agreement to settle the issue.

With the settlement agreement, the parties have agreed to withdraw legal proceedings and any counter claim against each other, with no liberty to file afresh. Star Media will also be allowed to recognise the bank guarantee of RM50 million it called in February 2018 as "other income".

"Hence, the settlement agreement is expected to have a positive impact on the earnings, earnings per share (EPS) and net assets (NA) per share of the company for the financial year ending Dec 31, 2024. The impact to the EPS (earnings per share) and NA (net asset) per share is estimated to be approximately RM0.07," Star Media said in a filing with Bursa Malaysia on Monday.

The legal dispute, which started six years ago, centred on the divestment of the land by Star Media to JAKS Resources in 2011, in return for JAKS Resources building a 15-storey office tower for Star Media on the site.

JAKS Resources’ unit JAKS Island Circle Sdn Bhd (JIC) also provided a RM50 million bank guarantee to assure the completion and delivery of the office tower. On top of that, JAKS provided its own corporate guarantee in favour of Star Media. However, JAKS Resources allegedly faced significant delays, missing the delivery deadline by 28 months.

In 2018, Star Media demanded the bank guarantee, asserting that JIC had failed to fulfill its delivery obligations, a claim JAKS disputed. Nevertheless, JAKS released the bank guarantee to Star Media in January 2019.

Despite this, Star Media initiated legal action on April 30, 2019, alleging that JAKS Resources had not met its obligations under the corporate guarantee for JIC to deliver the office tower. Star Media sought RM134.5 million as the remaining purchase price of the land, in addition to RM43.22 million in late payment interest.

In response, JAKS filed a counterclaim for the return of the RM50 million bank guarantee, along with RM248.24 million in liquidated damages, and RM297.04 million for loss of proceeds from a corporate fundraising exercise, which it argued were adversely impacted by Star Media's lawsuit.

The High Court in August 2020 partly allowed Star Media's summary judgment application in respect of the corporate guarantee claim against JAKS Resources, ruling that the company be paid the RM134.5 million balance of the purchase price of the land and the late payment interest at a rate of 8% per annum, from Oct 25, 2025 to July 6, 2020.

However, this summary judgement was set aside by the Court of Appeal in 2021, who ordered the matter be sent back to trial at the High Court. The Federal Court then dismissed Star Media's appeal against that decision and upheld the appellate court's order.

Shares of Star Media closed 0.5 sen lower, or 1.20%, at 41 sen on Monday, for a market capitalisation of RM299.21 million. JAKS Resources, meanwhile, closed unchanged at 13 sen with a market capitalisation of RM338.89 million.

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