KUALA LUMPUR (Oct 30): Avillion Bhd (KL:AVI), which operates beach resorts, hotels and spas in Malaysia and Indonesia, is embroiled in a dispute with an individual claiming ownership of the land occupied by its Villa Cinta resort in Bali, Indonesia, over an alleged expired lease and outstanding rental obligations.

The dispute involves PT Avillion Indonesia (PTAI), a 99%-owned indirect subsidiary of Avillion, which received a letter dated Oct 13, 2026 from solicitors representing Shirley Winarso over contractual and commercial arrangements relating to the occupation and use of Villa Cinta.

Shirley claims ownership of the land on which the resort is situated and alleges that PTAI's lease expired on Jan 15, 2026 without being renewed. The claims primarily relate to alleged unpaid rent and other obligations arising from PTAI's continued occupation of the property beyond the lease term.

In the letter, Shirley also proposed settling certain financing arrangements through deductions from the outstanding loan principal.

The proposed deductions total 9 billion rupiah, comprising provisional claims of 4.89 billion rupiah for unpaid rent, excess occupation, repairs and related costs, as well as a further 4.11 billion rupiah discount on the loan repayment by Shirley.

In a filing with Bursa Malaysia on Friday, Avillion said the provisional claims remain subject to verification and adjustment, adding that the financial implications of the dispute cannot yet be determined with certainty.

Following a review of the allegations, PTAI responded to Shirley's solicitors on Oct 29, disputing the assertions and claims while expressly reserving all its rights.

Avillion said it is seeking legal advice and reviewing the matter. No legal proceedings have been commenced against PTAI or Avillion as at the date of its announcement.

"The board will take all appropriate steps to defend the company's position and protect its interests," Avillion added.

Villa Cinta had a net book value of RM11.2 million as at March 31, 2026 and forms part of Avillion Group's hospitality assets in Indonesia.

The group expects to incur legal and professional fees in connection with the dispute but said no provision has been recognised for the matter.

Based on information currently available, Avillion does not expect the matter to have a material financial or operational impact on the group.

For the financial year ended March 31, 2026, Avillion's net loss widened to RM14.9 million from RM8.8 million in the previous year, partly reflecting a one-off impairment charge of RM4.9 million arising from structural damage to pontoon assets caused by Typhoon Senyar.

Revenue declined to RM55.2 million from RM58.5 million, due to lower contributions from the hotel and travel division amid softer demand and intensifying competition.

Avillion shares fell half a sen or 14.29% to close at three sen at Friday's midday break, valuing the group at RM37.18 million. The stock has declined by 40% year to date.