Kinsteel Bhd (In Liquidation) ("Kinsteel") wishes to announce that its 51%-owned subsidiary, Perfect Channel Sdn Bhd (“PCSB”) had on 18 December 2020 issued a notice to commence arbitration proceedings (“Arbitration Notice”) against Allianz General Insurance Company (Malaysia) Berhad (“Allianz”) in relation to disputes arising from the Industrial All Risks Insurance Policy No. 19FKL000488-00 which PCSB took up with Allianz for Material Damaged on Lot Nos. 8067- 8072 (PT1810-PT1815) all in the Mukim Gurun, Daerah Kuala Muda, 08100 Bedong, Kedah for the period of 15 March 2019 to 14 March 2020 (“Insurance Policy”).

Under the Arbitration Notice, PCSB is claiming against Allianz, inter alia, for the following:

i)              A declaration that Allianz shall give or be deemed to have given PCSB an extension of time per Clause 28(i) of the Insurance Policy to reinstate the damaged property;

ii)             a declaration that the reinstatement value basis is the preferred and/or correct calculation as opposed to the value of the damaged property at the time of loss;

iii)            Allianz shall pay to PCSB the sum of RM31,100,000.00 on a reinstatement value basis to reinstate the damaged property;

iv)            damages to the loss of business and profit to be assessed;

v)             interest at the rate of 5% per annum on all damages from the date of award until the date of full and final settlement;

vi)            that Allianz shall pay all costs of the Arbitration Proceedings including the fees and expenses of the Arbitrator;

vii)           that Allianz shall indemnify PCSB for its legal costs on a solicitor-client basis;

viii)          any other reliefs or remedies the Arbitrator deems fit to grant.

PCSB had on 28 December 2020, been informed by its solicitors that Allianz had served its Response to the Arbitration Notice. Under the Response to Arbitration Notice, Allianz is agreeable to having resolved the above dispute by way of arbitration.

The arbitration proceedings commenced by PCSB is not expected to have any material effect on the earnings, net assets and gearing of Kinsteel for the financial year ending 31 December 2020.

None of the directors or major shareholders of Kinsteel or persons connected with them has any interest, direct or indirect, in the arbitration proceedings.

Pending the above arbitration proceedings, PCSB had commenced restoration works on the standby power transformer and expected completion by first quarter 2021.

Kinsteel will make further announcements if there are any material developments on the above matter.

This announcement is dated 30 December 2020.