KUALA LUMPUR (May 9): Cape EMS Bhd (KL:CEB) has clarified that its proposed collaboration with Aeronas Aerocraft Sdn Bhd to establish a light aircraft assembly venture in Malaysia never progressed beyond an exploratory memorandum of understanding (MOU), following a RM279 million lawsuit filed against its subsidiary.
Cape EMS is in the business of electronic manufacturing services and aluminium die casting.
In a statement on Saturday, Cape EMS said the MOU signed on March 9, 2025 between Cape Manufacturing (M) Sdn Bhd (CMM) and Aeronas was non-binding and subject to multiple conditions precedent from the outset.
The group said no binding commercial, operational, investment or implementation agreements were subsequently executed between the parties.
“The proposed collaboration was expressly subject to the fulfilment of various conditions, including but not limited to the successful establishment of a light aircraft assembly plant, the obtaining of all relevant regulatory approvals, and compliance with applicable commercial, technical, operational, financial and corporate governance requirements,” it said.
Cape EMS said CMM later decided to terminate the MOU after its due diligence and risk assessment process identified concerns relating to corporate governance, compliance, as well as the financial and commercial viability of the proposed venture.
The company described Aeronas’ claims as baseless, speculative and made in bad faith.
It said the RM10.02 million special damages claim was unfounded as Aeronas had allegedly failed to fulfil its obligations under the MOU.
Cape EMS added that the proposed RM40 million financial assistance intended to support a plant capable of producing 30 aircraft annually never materialised because Aeronas failed to secure confirmed customer orders and deposits.
The company also disputed the RM229.5 million loss of revenue claim, arguing that it was based on projected aircraft sales without confirmed orders or deposits.
Cape EMS said it has instructed its solicitors to seek further particulars of the claims and, if unsupported, to apply to strike out the suit.
In a filing with Bursa Malaysia on Friday, Cape EMS said that CMM has filed a counterclaim on Friday against Aeronas and four others — PetraX5 Sdn Bhd, Raja Shazreen Petra Raja Azman Shah, Raja Iman Petra Raja Azman Shah and Kamarulzaman Abdul Karim — at the High Court in Kuala Lumpur. CMM alleges misrepresentation and breaches of obligations by the five defendants, and is seeking recovery of monies paid, damages, restitution and other consequential reliefs.
Separately, lawyers acting for Aeronas Messrs Hafarizam Wan & Aisha Mubarak in a statement said Cape EMS failed to fulfil contractual obligations under an agreement dated March 9, 2025, including providing more than RM50 million in capital injection and loans for the project.
Under the proposed joint venture, Aeronas was to manufacture and commercialise the BA-42 twin-engine turboprop aircraft in Malaysia using rights licensed from Mael Aircraft Corporation.
Aeronas claimed Cape EMS’ failure to provide funding delayed the planned launch of the aircraft, which had been targeted for December 2025, and could result in the loss of existing customer orders.
According to the Aeronas statement, the suit filed at the Johor Bahru High Court has been fixed for first case management on May 25.
Cape EMS’ share price closed unchanged on Friday, valuing the company at RM282.89 million.