Stark Corp. Pcl, a Thai maker of electrical components engulfed in an accounting scandal, has cited the Russia-Ukraine war as a reason for pulling out of an agreement to buy a German maker of automotive cable solutions for €560 million.

The deal between Stark and Leoni AG and Leoni Bordnetz-Systeme GmbH for Leoni Business Group Automotive Cable Solutions allowed the buyer to withdraw if there was a military attack against any sovereign countries in jurisdictions in which it operated and that had a material impact on its financials, the Thai firm said in an exchange filing Monday.

After the initial purchase agreement was signed in May last year, the war continued and Stark’s board considered the military offensive would cause significant “negative changes to the economic situation” and adversely affect the finances of the automotive cable solutions business, the Thai company said.

“The military offensive in Ukraine has resulted in an economic growth rate downshift in several jurisdictions, cost of energy, wages and inflation rate increasing, and supply chain disruption, for example,” Stark said.

Leoni and Leoni Bordnetz-Systeme have, meanwhile, filed a case with the German Arbitration Institute seeking compensation of €608 million and Stark has said it’s engaged advisors to file a counter claim. Stark said it’s in the process of responding to the request for arbitration by Leoni and sought an extension until Sept. 19 to respond to the filing.

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Bangkok-listed Stark has seen its shares erase almost all of their value this month after it defaulted on its bonds and missed a deadline to announce financial results. The company reported a combined loss of 12.6 billion baht ($363 million) in the last two years as it restated earnings for 2021, following the discovery of various irregularities in its books.

Leoni’s claims are unilateral and Stark is entitled to argue against it during the arbitration process, the Thai company said, adding the legal process may take a long time.

Leoni had agreed to sell the Business Group Automotive Cable Solutions belonging to its Wire & Cable Solutions division as part of its plan to refinance debt. But the collapse of the deal pushed Leoni to seek debt restructuring with banks and a strategic investor that won a majority approval last month.