MAA Group, Zurich settle longtime dispute
Posted on 25 July 2013 - 05:38am
PETALING JAYA (July 25, 2013): MAA Group Bhd, controlled by
the Melewar group, which is linked to the Negeri Sembilan royalty, will finally
get to proceed with plans to buy new businesses after reaching a settlement
agreement with Zurich Insurance Co Ltd yesterday.
Under the settlement, Zurich has agreed to pay MAA Group RM103.43 million on top of the RM344 million acquisition price for MAA Group's interest in MAA Assurance Alliance Bhd and its subsidiaries.
The RM103.43 million amount is subject to the deduction of the Senai Desaru and Domayne bonds transfer price and Prima Avenue Klang property holdback amount of RM3 million, such that the net amount payable by Zurich into the escrow account is RM78.83 million.
However, Zurich will instruct and withhold the RM3 million until delivery of the individual strata titles for Block A of Prima Avenue Klang within three years.
In a filing with Bursa Malaysia yesterday, MAA Group said it has agreed to accept transfer of the Senai Desaru and Domayne bonds at the impaired carrying values and the deduction of the Senai Desaru and Domayne bonds transfer price from the additional consideration by Zurich.
To recap, MAA Group had disposed of its interest in MAA Assurance and subsidiaries – Multioto Services Sdn Bhd, Maagnet Systems Sdn Bhd, Malaysian Alliance Property Services Sdn Bhd and Maagnet-SSMS Sdn Bhd to Zurich in September 2011.
However, a dispute had occurred between the two companies over certain downward adjustments made to the draft completion accounts and statement of aggregate net assets value of the disposed subsidiaries.
As at April 30, 2013, there is a balance of RM131.7 million in the escrow account including interest earned on the escrow account, but excluding quarterly releases of RM18 million up to April 30, 2013.
Following the sale of MAA Assurance and its subsidiaries, MAA Group has been classified under Practice Note 17 for not having a core business. Its two remaining businesses are in MAA Takaful Bhd, an Islamic insurer, and MAAKL Mutual Bhd, a unit trust company, which are still small.
In a June 2013 interview with SunBiz, MAA Group executive chairman Tunku Datuk Ya'acob Tunku Abdullah had said under the new Islamic Financial Services Act, 2013 (IFSA), any acquisition MAA Group plans to make in future is restricted to the financial services sector.
However, he did not specify which areas of the financial sector the group plans to acquire but said, "there is not many out there anyway."
The IFSA, which came into effect on July 1, requires takaful operators holding a composite licence to operate under two separate entities with separate capital requirements.
MAA Takaful would have to split into a separate life and general takaful units, with a minimum capital of RM100 million for each company.
Under the settlement, Zurich has agreed to pay MAA Group RM103.43 million on top of the RM344 million acquisition price for MAA Group's interest in MAA Assurance Alliance Bhd and its subsidiaries.
The RM103.43 million amount is subject to the deduction of the Senai Desaru and Domayne bonds transfer price and Prima Avenue Klang property holdback amount of RM3 million, such that the net amount payable by Zurich into the escrow account is RM78.83 million.
However, Zurich will instruct and withhold the RM3 million until delivery of the individual strata titles for Block A of Prima Avenue Klang within three years.
In a filing with Bursa Malaysia yesterday, MAA Group said it has agreed to accept transfer of the Senai Desaru and Domayne bonds at the impaired carrying values and the deduction of the Senai Desaru and Domayne bonds transfer price from the additional consideration by Zurich.
To recap, MAA Group had disposed of its interest in MAA Assurance and subsidiaries – Multioto Services Sdn Bhd, Maagnet Systems Sdn Bhd, Malaysian Alliance Property Services Sdn Bhd and Maagnet-SSMS Sdn Bhd to Zurich in September 2011.
However, a dispute had occurred between the two companies over certain downward adjustments made to the draft completion accounts and statement of aggregate net assets value of the disposed subsidiaries.
As at April 30, 2013, there is a balance of RM131.7 million in the escrow account including interest earned on the escrow account, but excluding quarterly releases of RM18 million up to April 30, 2013.
Following the sale of MAA Assurance and its subsidiaries, MAA Group has been classified under Practice Note 17 for not having a core business. Its two remaining businesses are in MAA Takaful Bhd, an Islamic insurer, and MAAKL Mutual Bhd, a unit trust company, which are still small.
In a June 2013 interview with SunBiz, MAA Group executive chairman Tunku Datuk Ya'acob Tunku Abdullah had said under the new Islamic Financial Services Act, 2013 (IFSA), any acquisition MAA Group plans to make in future is restricted to the financial services sector.
However, he did not specify which areas of the financial sector the group plans to acquire but said, "there is not many out there anyway."
The IFSA, which came into effect on July 1, requires takaful operators holding a composite licence to operate under two separate entities with separate capital requirements.
MAA Takaful would have to split into a separate life and general takaful units, with a minimum capital of RM100 million for each company.
