KUALA LUMPUR (Oct 25): OB Holdings Bhd, en route to list on the ACE Market of Bursa Malaysia on Oct 29, said its wholly owned subsidiary Orient Biotech Sdn Bhd has received a dispute notice from a customer, Nature One Dairy (Hong Kong) Ltd (NOD), for allegedly breaching a purchase and supply agreement between the two.
In a bourse filing on Friday, the fortified food and dietary supplement manufacturing service provider said NOD claims that Orient Biotech had infringed its intellectual property (IP) rights.
The allegations stem from Orient Biotech’s production of a milk powder product for a new customer, which NOD claims uses "formulations, recipes and ingredients" identical to its own, the filing read.
Due to this, NOD is requesting that Orient Biotech cease manufacturing of the product and provide information on the dealings with the new customer within 14 days of the notice.
In response, Orient Biotech, after consulting with its solicitors, has denied the allegations, asserting that the ingredients in question are generic and commonly available in the market.
"Orient Biotech has agreed to cease manufacturing of the relevant product to the relevant customer provided that NOD’s claims are established by evidence.
"However, Orient Biotech has put NOD on notice that it will hold NOD liable and seek full indemnification from NOD from and against all losses, damages, claims, expenses, proceedings, suits, legal costs that Orient Biotech may suffer as a consequence of the dispute notice, including but not limited to arising from compliance with NOD’s cease and desist demand, if NOD’s claims are found to be unsubstantiated or without merit," OB Holdings noted.
Its subsidiary is now in discussions to resolve the dispute amicably by discussions and negotiations with NOD within 30 days from the date of the dispute notice, failing which the dispute shall be referred to mediation in accordance with the terms of the agreement with NOD.
The board of directors is of the opinion that the dispute is unlikely to materially affect the group’s financial and operational standings, said OB Holdings.
This is based on the facts that the total value of orders from the new customer amounts to RM570,000, while NOD-related sales have decreased significantly in recent years, and there are currently no outstanding purchase orders from NOD.
The group does not anticipate significant sales from NOD in future. It would instead focus on procuring sales from new and existing customers moving forward, said OB Holdings.
OB Holdings, whose fortified food and dietary supplement brands include Bonlife, GoHerb, Zen Night, Sleepin’ Beaute, EZ:Nitez, Beyoute, Zen Youte and Zenliv, aims to raise RM28.8 million from its initial public offering, which entails a public issue of 120 million new shares, which account for 30.64% of the group’s enlarged issued capital. At an IPO price of 24 sen per share, OB Holdings will have a market capitalisation of RM94 million upon listing.