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JES in legal tussle over planned forestry investment

JES in legal tussle over planned forestry investment
Chinese shipbuilder JES International has filed a lawsuit against a Chinese businessman for a breach of a moratorium over the acquisition of a forestry business in Congo.

JES had announced in April this year a plan to buy a 51% stake in forestry enterprise SCIBOIS, which owns 75% stake in a sizable forest valued at more than $3bn.

The deal has seen JES transferred a 120.8m first tranche ordinary shares of the company to one of two vendors, Chinese national Yang Shushan, in exchange for 20% stake in SCIBOIS in the first part of the deal.

Under the terms of the deal, JES and the vendors were not supposed to transfer or dispose of the JES shares within 12 months, but Yang had transferred 60m shares to “an account of a sub-depository agent” in late-July.

JES then proceeded with legal action that saw the Singapore High Court ordered Yang to recover and restore the 60m shares and denied him from further selling, transferring and pledging away the 120.8m shares.

“The company has been negotiating and discussing with Yang to mutually work out possible remedies to the breach of moratorium but Yang is not willing to cooperate with the company to come to a meaningful resolution,” JES said.

Yang subsequently on 23 September filed an application to set aside the court injunction. Yang claimed in his affidavit that he does not read English and he had signed the sale and purchase agreement with JES without understanding the terms.

The other vendor, Yang Nan (YN), who is Yang’s son, also filed affidavit in support of Yang, claiming that their command of English is not strong and that they did not understand the terms of the deal.

JES said Jin Xin, chairman and ceo of the company, will be refuting the claims made by both Yang and YN.

“The company also wish to bring to the attention of shareholders that during the course of conducting due diligence on the target group, the vendors were not forthcoming in providing the necessary support, which shows that the vendors were not acting in good faith,” Singapore-listed JES stated.

JES has sought to diversify into the foresty business due to the prolonged downturn in the global shipbuilding segment, which is the core business of JES.

Meanwhile, a subsidiary of JES, Jiangsu New East Marine Equipment Co, was dropped from China’s ‘white list’ of shipyards recently. The ‘white list’ yards are expected to receive policy support from the Chinese government.