Yongnam to pay Axis-Reit’s trustee $30.2m in damages over breach of lease agreement

SINGAPORE – Yongnam and its subsidiary have been ordered by a court in Malaysia to pay RM105.4 million (S$30.2 million) in damages to the trustee of Axis-Reit.

The steel fabricator had previously received a letter of demand from RHB Trustees on behalf of Axis-Reit in December 2022 after Yongnam Engineering had failed to adhere to a lease agreement for a unit it occupied at the Axis Steel Centre@SILC Johor.

In 2014, Yongnam Engineering had signed a tenancy agreement with Axis-Reit for 15 years. However, the lease agreement was terminated on May 8, 2023, after Yongnam Engineering defaulted on payments. 

As a result, RHB Trustees sued the Yongnam subsidiary for rental payments amounting to $1.1 million, as well as $30.2 million worth of rent it would have collected had Yongnam Engineering fulfilled the contract.

Yongnam Holdings and its subsidiary will also have to pay compensation charges at a rate of 1.5 per cent for both sums, from June 8, 2023, until the date of full and final realisation as well as legal expenses. 

Yongnam Engineering has received several letters of demand in 2023.

On Sept 5, the unit received a letter of demand from the attorney of Malayan Banking in relation to

outstanding payments of RM15.9 million

due under three loan facilities.

Then on Sept 11, it received another letter of demand from Mitsui Bussan Pana Harrison – issued by the solicitors of Ergo Insurance – in relation to outstanding payments due under a workman’s compensation policy.

Trading of Yongnam Holdings’ shares has been suspended since Nov 24, 2022.

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