KUALA LUMPUR: Shares in Malaysian casino operator Genting fell nearly 19 per cent on Tuesday (Nov 27) after it sued the Walt Disney Co. and 21st Century Fox for allegedly abandoning a project to build a theme park in the country.
The US $ 1 billion proceedings filed in the US District Court in Los Angeles alleged that Disney and Fox failed to honor a 2013 deal to license intellectual property, including Fox animated films such as Ice Age and Planet of the Apes, for the theme park outside Kuala Lumpur.
The suit alleges that Fox wanted to terminate the contract and that Disney executives were also keen on distancing themselves from the project because the park would be adjacent to a casino and would harm the company's "family-friendly" image.
In a statement to AFP, a Disney spokesman dismissed claims against the company as "utterly without merit."
Fox representatives did not respond immediately to a request for comment.
Genting Malaysia Berhad (GENM) said in a message to the local exchange that it was claiming damages over US $ 1 billion.
It vowed "to fully enforce its rights" under the deal and "claim for the cost of its investments and consequential and punitive damages."
"The litigation is not expected to impact GENM's current business operations," said the company.
However, investors still sold Genting stocks, which plunged by as much as 18.6 per cent before recovering slightly. They were down 14.72 per cent by mid-afternoon.
Brokerage CGS CIMB Securities described news of the litigation as a "major negative surprise" for the theme park, the opening of which has already been delayed by more than a year.
"Potential legal complications" could also affect the new proposed opening date for the park, scheduled for the first half of 2019, added.
"The plan was for Fox World to be the new centerpiece of Resorts World Genting, GENM's integrated resort complex in Genting Highlands," according to the lawsuit.
The suit alleges that Fox had used repeated delay in the project as a reason to cancel the deal and recently issued a notice of default, requiring the developer to open the park within 30 days, an unlimited deadline.
"This is a case about revelers' sales, first by Fox, and then by Disney, after the latter began the process of acquiring Fox in a deal now expected to close in the first half of 2019," the suit claims.
It added that Genting was entitled to recoup the more than US $ 750 million it had already invested in the park, along with consequential and punitive damages over $ 1 billion.
Built on more than 10 hectares in the Genting Highlands, an idyllic mountain retreat at an hour's drive outside Kuala Lumpur, the park has been set to feature more than 25 rides and attractions based on such blockbusters as "Ice Age", "Life of Pi , "Alien" and "Night at the Museum."