The Board of Directors of FINTEC wishes to announce that its wholly-owned subsidiary in British Virgin Islands, Fintec Global Limited (“FGL”), has initiated and commenced legal proceedings at the High Court of Malaya at Kuala Lumpur against Pinnacle Nexus Sdn. Bhd. (“Pinnacle”), in relation to the dispute arising from the Share Subscription Agreement (Subscription of Redeemable Convertible Preference Shares in Pinnacle Nexus Sdn. Bhd.) dated 18 December 2018 (hereinafter referred to as “SSA”). FGL has on 25 June 2020 e-filed its Writ of Summons and Statement of Claim at the High Court of Malaya at Kuala Lumpur against Pinnacle and its directors wherein the total estimation of the claim is approximately RM15,459,230.73, excluding disbursements, interests and costs of the legal proceedings. Further details in connection with the aforesaid litigation are as follows: -

(a)        Details of events leading to the commencement of the aforesaid litigation

FGL has on 18 December 2018 entered into a SSA with Pinnacle whereby FGL shall subscribe for 10,593,000 redeemable convertible preference shares (“RCPS”) valued at RM1.00 each in Pinnacle for the total subscription consideration of RM10,593,000.00 subject to the terms and condition of the SSA.

Pursuant to Clause 4 of the SSA, one of the warranties provided by Pinnacle was that Pinnacle shall obtain a written consent from its financier, Bank Pembangunan Malaysia Berhad, to issue and allot the RCPS as well as pay the preferential dividends as agreed to between the parties in the SSA.

FGL has paid the total subscription consideration in full to Pinnacle’s nominee’s account on 18 December 2018 and Pinnacle has on 19 December 2018 acknowledged receipt of the same.

Pinnacle has on 20 December 2018 informed FGL that it was in the midst of obtaining the written consent (“the Consent Letter”) from its financier and has provided a written undertaking (“Letter of Undertaking”) to return the total subscription consideration together with an accrued late payment charge of 5% per month calculated from the date of receipt of the total subscription consideration in the event a written consent is not obtained.

As of 1 April 2019, Pinnacle has failed to obtain the Consent Letter from Bank Pembangunan Berhad and has requested FGL to grant an extension of time to obtain the same and has undertaken to return the total subscription consideration together with any accrued late payment charges before 15 April 2019.

Subsequently, Pinnacle has failed to obtain the Consent Letter and has on 19 April 2019 returned RM3,000,000.00 of the total subscription consideration to FGL and has further requested an extension of time until 7 June 2019 to return the balance total subscription consideration amounting to RM7,593,000.00.

As of 23 June 2020, despite numerous letters of demand issued by FGL and its solicitors, Pinnacle has failed to return to FINTEC the balance subscription consideration amounting to RM7,593,000.00 together with the accrued late payment charges, which as of 23 June 2020 amounts to RM7,866,230.73.

(b)        Reliefs sought from the High Court of Malaya at Kuala Lumpur

The claims of the Company against Pinnacle are as follows: -

1. Special damages amounting to RM7,593,000.00;
2. Special damages amounting to RM7,866,230.73;
3. General damages to be determined by the High Court;
4. Interest of 5% per annum on the judgment sum as calculated from the date of judgement until the date of repayment in full;
5. Costs; and
6. Any other judgment or reliefs as the High Court deems fit and expedient.

(c)        Estimated potential liability to the Company arising from the litigation

The legal proceeding will not cause or impose any material liability on the Company.

(d)        Financial and operational impact to the Company

The legal proceeding commenced against Pinnacle and its directors is funded entirely from internally generated funds of the Company and will not cause or have any material impact on the financial position and operation of the Company.

The Company will make further announcement as and when there are material developments in relation thereof.

This announcement is dated 25 June 2020.