DENTAL group Q&M’s wholly owned Malaysian subsidiary, Q&M Dental Group (Malaysia) (QDGM), has been granted an arbitral award against three shareholders of Malaysia dental equipment supplier AR Dental Supplies.
In March 2013, QDGM entered into a sale and purchase agreement with shareholders Tye Chee Wah, Chong Vooi Seong and Chan Sing Cheong to acquire a 70 per cent stake in AR Dental Supplies.
QDGM had also entered into a shareholders agreement with Tye, Chong and Chan to govern their relationship as shareholders of AR Dental. It then entered into a memorandum of deposit with Pride Access – an investment holding company owned by Tye, Chong and Chan – in connection with a property owned by Pride Access, which was deposited as security on behalf of the trio.
In FY2021, QDGM commenced arbitration proceedings with the Singapore International Arbitration Centre against Tye, Chong, Chan and Pride Access. At that time, the contribution of AR Dental to the group’s total equity was only 3.8 per cent.
Under the arbitration filed, QDGM had sought – among others – a declaration that it had validly exercised its rights under the shareholders agreement requiring Tye, Chong and Chan to buy back QDGM’s 70 per cent stake in AR Dental. This includes interest and other payments relating to annual guaranteed dividends payable.
In a bourse filing on Monday (Jul 15), QDGM said the arbitration tribunal has issued an arbitral award in its favour that renders Tye, Chong and Chan jointly and severally liable to pay RM5.4 million (S$1.6 million) in dividends payable to QDGM.
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Tye, Chong and Chan must also pay RM8.4 million to QDGM as per the buyback validly exercised by the latter. The trio must also pay interest of 10 per cent per annum on the sum of RM8.4 million from Jul 5, 2013 to the date of payment of RM8.4 million, less the proceeds of sale of the property under Pride Access which QDGM is to attempt to sell first.
In addition, Tye, Chong and Chan shall cause Pride Access to execute and deliver to QDGM the resolution of the board of directors and Pride Access’ shareholders for the sale of the property.
AR Dental is also required to repay QDGM a sum of RM2.5 million under shareholders’ loans.
Finally, Tye, Chong, Chan and Pride Access shall be jointly and severally liable to pay to QDGM an estimated RM545,000 in incurred legal costs and arbitration costs.
QDGM was represented by Shan Chambers. Following the arbitral tribunal’s decision, QDGM has instructed Shan Chambers to take the necessary steps for the recognition and enforcement of the award in Malaysia.
The dental group does not expect the award to have a material impact on its operations and financial performance for the financial year ended Dec 31, 2024.
As at Jul 15, the group has impaired its investment of RM6.3 million in AR Dental.
Shares of Q&M closed at S$0.295 on Monday, up S$0.005 or 1.7 per cent, before the announcement.
