Linear Corporation Bhd has the right to take legal action against its former director Alan Rajendram Jeya Rajendram if he fails to deliver on his promises pursuant to a legally binding indemnity letter that he had given to the company, said its executive director Mevin Nevis.
“The indemnity is tantamount to a guarantee all signed and properly done — witnessed by the Commission of Oaths,” Nevis told The Edge Financial Daily yesterday.
Linear had told Bursa Malaysia on June 21 that it had received a duly signed letter of indemnity (LOI) and statutory declaration (SD) dated June 17 from Alan Rajendram.
According to Linear, a director of Linear had accepted full responsibility for the financial commitment and exposure of the company to the RM1.66 billion King Dome Project and for the purpose of demonstrating the director’s conviction in the overall commercial viability.
It meant that the director had undertaken to “deliver” the King Dome project to Linear, to “indemnify” Linear in the event of any loss, including refund of the cash advanced and to take over the letter of award at cost in the event Linear decides not to proceed further. Linear said a Nov 30 deadline had been set.
The controversy surrounding Linear stems from the announcement of the RM1.66 billion district cooling project awarded by Seychelles-based Global Investment Group Inc (GIG) in relation to the little-known King Dome project in Manjung, Perak, which was then touted the “world’s biggest dome” housing an indoor city.
Meanwhile, the company’s management is expected to undergo a grilling by its minority shareholders at its 16th AGM today in Penang.
The board of directors is likely to face questions as to how the debacle happened, what steps it will take to improve its corporate governance and internal controls, how the company plans to get back the RM36 million paid to GIG and get itself back on its feet again.
The company’s three new directors appointed on May 7 — executive director Yap Chee Keong and Saw Heng Soo, and non-executive director Neoh Chee Kean — will be in the spotlight.
It is learnt that Yap, along with Nevis and its chief operating officer Clive Vincent Nelligan, will spearhead efforts for its corporate restructuring exercise.
Linear fell into the PN17 status last week. Sources close to the restructuring plans told The Edge Financial Daily last week that they expected the company to be out of PN17 status “within 12 months”. How that is achieved is unclear.
The AGM today will give Linear’s directors a chance to present their plans for the company moving forward. The key question on shareholders’ minds is probably whether the company will be able to recoup its RM36 million.
This article appeared in The Edge Financial Daily, June 29, 2010.
Written by Daniel Khoo
The Edge Malaysia
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