JES International Holdings has run into more hurdles in its attempt to take control of a forestry business in Africa.The Chinese shipbuilder said in April that it would use cash and shares to buy a 51% stake in Scibois Co, which owns a company in Congo involved in timber extraction. The value of the forest area is estimated to be more than US$3 billion ($3.7 billion), according to JES.
The first tranche of JES shares was transferred to one of the two vendors, Chinese national Yang Shushan, in July.
Both of them had agreed to a moratorium not to transfer or dispose of the JES shares within a period of 12 months, according to the shipbuilder, but it found out in July that Yang had transferred 60 million shares to an account of a sub-depository agent.
The company sought an injunction from Singapore’s High Court last month to stop Yang from selling or pledging the shares and to get back those shares already transferred.
Now, according to a regulatory filing today, the shipbuilder has discovered that Yang has sought legal action to set aside the court order.
Among other things, Yang claims that he does not read English and that he and the other vendor, Yang Nan, signed the sale and purchase agreement with JES without understanding the terms.
They also claim that JES chairman and CEO Jin Xin had not informed them of the moratorium throughout the course of their discussions over Scibois.
JES said it has started legal action against Yang Shushan for breaching the moratorium.
“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,” JES CEO Jin said in today’s statement.
“In addition, pending completion of the legal due diligence exercise, the company has received preliminary feedback from the appointed legal counsel for the due diligence that certain information of the target group provided by the vendors may be inaccurate.”
Shares of JES closed at 5.4 cents, down 8.5%, today.
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