Multiple lawsuits added up can be material so why does Oxley Holdings not disclose them?
It is unclear why Oxley Gem has sued Gracious Land, as the matter is related to an arbitration and the case file has been sealed from the public.
The High Court will be hearing at least two litigation cases involving Oxley Holdings this week. If you don't remember being alerted to these proceedings via the listed property firm's disclosures to the Singapore Exchange (SGX), it's because no such alerts exist.
Oxley's wholly-owned unit Oxley Gem is in a legal dispute with a firm called Gracious Land, and a chambers hearing is scheduled for Thursday. It is unclear why Oxley Gem has sued Gracious Land, as the matter is related to an arbitration and the case file has been sealed from the public.
Oxley did, however, disclose last year that the S$950 million sale of two Stevens Road hotels had fallen through after Gracious Land failed to pay a deposit of S$38 million. The buyer requested a refund of an initial S$9.5 million deposit, but Oxley had said this was non-refundable.
Separately, another unit of Oxley called Oxley Jasper is being sued by 40 home owners of Ampas Apartment for damages or compensation for pulling out of a S$95 million en bloc transaction. A pre-trial conference has been scheduled this week.
Oxley first brought up the Ampas Apartment project in March 2018, shortly after it had exercised the option to purchase the freehold plot.
In five corporate presentations filed via SGXNet from April to November 2018, Oxley identified the plot as one of its Singapore projects to be launched that year. It included such details as the launch date, date of temporary occupation permit, projected revenue and profit margin.
The last presentation that included the project was filed on Nov 15, 2018. Oxley had by then already informed Ampas Apartment's collective sale committee that a condition of the agreement was not met and it was entitled to rescind the agreement.
Investors anticipating a projected S$19.2 million profit from the development only found out it was aborted when media reported in January last year that Oxley Jasper is defending a lawsuit by Ampas Apartment owners.
Multiple other disputes
Oxley is, in fact, in multiple other legal disputes that it does not regularly keep investors informed of.
Last week, the High Court released its grounds of decision for dismissing an appeal by Oxley Consortium. The latter has been ordered to refund Geetex Enterprises Singapore the option fees for the purchase of two units in Oxley Tower for S$21 million.
Oxley Sanctuary, meanwhile, is defending alleged misrepresentation claims from 28 KAP Mall shop owners for an unspecified amount of compensation.
Each of these cases may not be significant enough on their own to be disclosed.
SGX states that in general, the board of a listed issuer is responsible for determining whether information is material and disclosable.
An Oxley spokesperson said, in response to a query from The Business Times, that it cannot share information on ongoing arbitration proceedings as such proceedings are confidential. Further, litigation proceedings in chambers are also confidential.
The spokesperson added that information is deemed material if the financial impact measured against the group's financial position crosses a certain threshold, particularly if the financial impact has a material adverse impact on the group. The litigation cases cited either do not meet this threshold or will not have an adverse financial impact even if the outcome is unfavourable.
"Oxley has abided by the SGX Listing Rules and all disclosures required under the SGX Listing Rules have been made," commented the spokesperson.
Be that as it may, the cases collectively may pose a risk.
Oxley is already highly geared - its net-debt-to-adjusted-capital ratio stood at 2.47 times as at June 30 - which limits its breathing room.
The number of ongoing cases is also, arguably, a risk investors should be apprised of as the cases require management's attention and the board's scrutiny.
Investors would surely be interested in understanding Oxley's legal exposure when considering whether or not to buy its shares.
Source: Business Times © Singapore Press Holdings Ltd. Permission required for reproduction.