Astro IPO dogged by ongoing court battle

Although Astro Malaysia Holdings Bhd initial public offering (IPO) launched by Prime Minister Najib Abdul Razak last Friday is said to be the third-largest in the country this year, there are fears that a protracted court battle arising from the ongoing suit from AV Asia Sdn Bhd may affect its prices.

This follows as AV Asia had, on Aug 28, obtained leave from the Federal Court for its injunction application to be heard on its appeal in its case against Astro subsidiary Measat Broadcast Network Systems Sdn Bhd, after failing to at the Kuala Lumpur High Court and also the Court of Appeal.

This unanimous decision by a high-powered five member bench led by Court of Appeal president Md Raus Sharif, and which also included chief judge of Sabah and Sarawak Richard Malanjum, had brought a lifeline to AV Asia's application.

It is learnt that on the day Najib launched Astro's IPO (ie Friday), AV Asia also filed a notice of appeal with the registrar of both the Federal Court and Court of Appeal following the Federal Court’s decision. This is to appeal the Sept 12, 2011 Court of Appeal decision which rejected the injunction.

Although there has yet to be a date fixed to hear the appeal at the highest court in the country, the Federal Court will determine several questions of law which would be pertinent and may affect Astro's shares should the apex court grants the injunction.

The questions of law posed in the injunction appeal are:

• Can the court refuse to grant an injunction on the basis that monetary damages will be sufficient to compensate the party applying for an injunction?

• In relation to the court granting an injunction, can the parties by contract pre-determine and agree on the issue of where the balance of convenience rely?

It was reported that Astro hopes to raise RM4.56 billion capital from its 1.52 billion shares put up on offer when it is slated to go for listing on Oct 19.

AV Asia: Measat breached terms of agreement

AV Asia filed a RM1.3 billion suit against Measat, two years ago where it also named Tele System Electronic (M) Sdn Bhd, which supplies the Astro and Astro Byond dish to customers. 

It claimed the defendants had violated a mutual non-disclosure agreement (MNDA) dated Aug 1, 2008.

The agreement was for the plaintiff and Japanese company Maspro to help develop a system to reduce the problem of ‘rain fade’ (disruption of broadcast during thunderstorms), plaguing customers.

AV Asia engaged Maspro on April 1, 2007, as its sales agent to promote Maspro products, and initiate research and development (R&D), design and manufacture of a satellite dish to reduce 'rain fade'. Upon completion of the testing and R&D on Measat's satellite dish, an expert report was submitted.

Maspro had on Aug 1, 2008 granted AV Asia the exclusive rights to manufacture and sell Maspro's 'rain fade' product in Malaysia. However, the plaintiff alleged that Measat had disclosed confidential information to bidders in the second tender exercise.

A month later they filed the injunction application against Measat to stop it from supplying its customers with satellite dishes that Tele System had manufactured using the technology allegedly provided by the plaintiff, that it holds as confidential information. 

Measat's lawyers admitted dangers of injunction

AV Asia's managing director V Vijayakumar, in his affidavit when filing the injunction in 2010, claimed unless an injunction is granted, they will suffer irreparable damages that may not be compensated.

Vijayakumar (centre, in photo) alleged Measat had breached the terms of the MNDA and that there was a proper case for the court to grant the interlocutory injunction.

He also argued that the defendants will not suffer any prejudice if the court grants the injunction.

Vijayakumar added that granting an injunction was purely to maintain the status quo between all parties pending further orders by the court.

In Measat's submission during AV Asia's leave application, the lawyers acknowledged the dangerous prospect should the court allow an injunction which would affect its existing and potential customers and result in a loss of income in excess of RM200 million in 2011 and probably a similar amount this year.

This was also agreed by the Kuala Lumpur High Court judge who presided the case but decided not to grant an injunction and ordered the matter to go to arbitration.

Measat is controlled by Malaysia’s second-richest man Ananda Krishnan (right), who has investments in telecommunications and energy assets.

The deal is being handled by CIMB, Maybank and RHB, while several foreign banks are also advisers including UBS, Credit Suisse, Goldman Sachs and JPMorgan.

– Reuters