KUALA LUMPUR (July 14): WCT Holdings Bhd said today its wholly-owned subsidiary WCT Bhd (WCTB) and Meydan Group LLC had yesterday (July 13) entered into a settlement agreement under which Meydan will pay WCTB AED726.57 million (about RM828.25 million) in a full and final settlement linked to the Nad Al Sheba Dubai Racecourse contract dispute between both parties.
In a Bursa Malaysia filing today, builder WCT Holdings said the settlement amount is equivalent to 65% of the principal sum of AED1.15 billion awarded to WCTB earlier by Dubai’s Arbitral Tribunal under the final award in relation to the dispute.
"The board of directors of WCT (Holdings) is of the view that, barring any unforeseen circumstances, the settlement when completed is expected to contribute positively to the earnings per share and net assets per share of the group.
"The net gearing ratio of the group is also expected to improve,” WCT Holdings said.
According to WCT Holdings, Meydan will pay the RM828.25 million final settlement sum in two portions under which the second tranche will be divided into 12 equal quarterly instalments.
Under the first portion, WCT Holdings said the initial payment of AED279.45 million (about RM318.56 million) being a sum equivalent to about 25% of the principal sum of AED1.15 billion, will be paid to WCTB by Tuesday (July 20, 2021).
For the second portion, the balance of AED447.12 million (about RM509.69 million), being a sum equivalent to about 40% of the principal sum of AED1.15 billion, will be paid in 12 equal quarterly instalments of AED37.26 million (about RM42.47 million) each commencing from Oct 20, 2021, according to WCT Holdings.
"Simultaneously with the execution of the settlement agreement and in accordance with the terms therein, Meydan has delivered a promissory note executed by Meydan in favour of WCT Bhd, unconditionally and irrevocably promising to pay on demand the balance settlement sum.
"Subject to and upon WCT Bhd’s receipt of the initial payment, all sums other than the settlement sum which would otherwise be due under the final award will be deemed waived and discharged by WCT Bhd and the proceedings will be withdrawn.
"In the event Meydan defaults on the initial payment, the settlement agreement shall cease to have any effect and the final award (and all judgments and orders related thereto) shall remain in full force and effect as if the settlement agreement had not been executed by the parties and WCT (Holdings) shall be at liberty immediately to resume with the (legal) proceedings,” WCT Holdings said.
The WCTB-Meydan dispute dates back to 2009.
News reports indicated that the dispute started when WCTB and its joint venture (JV) partner Arabtec Construction LLC announced in January 2009 that the JV's contract to construct the racecourse in Dubai was terminated by Meydan on the grounds of a delay in the completion of the JV company's part of the job.
It was reported that at that time, the WCTB-Arabtec JV had completed about 65% of the job, which included the construction of the main building, external and infrastructure work, and had appointed nominated subcontractors to undertake some portions of the job on behalf of the JV company.
News reports indicated that in the WCTB-Arabtec JV's arbitration claim, the WCTB-Arabtec JV had sought from Meydan monetary compensation for completed but unpaid work, nominated subcontractors' dues, interest costs and loss of reputation.
On Bursa today, WCT Holdings' share trade was halted between 9am and 10am in conjunction with the announcement on the settlement agreement under which Meydan will pay WCTB AED726.57 million in full and final settlement linked to the Nad Al Sheba Dubai Racecourse contract dispute.
At 11.38am, WCT Holdings' share price rose 4.5 sen or 8.74% to 56 sen for market value of about RM784 million.
WCT Holdings has 1.4 billion issued shares.