Dubai: Dubai developer Union Properties has reached a settlement of Dh620 million with its former chairman Khalifa Hassan Ali Saleh Al Hammadi, his family members, and other former board members, Fadi Saba, Chief Legal Officer, Union Properties PJSC, said on Monday.
Following the Union Properties annual general meeting (AGM) on April 17, Saba revealed that the terms of the settlement state that Dh620 million will be paid in cash to the company in one year after satisfying specific terms and conditions.
Union Properties initiated claims against former members of its board of directors in 2021 after they came under the purview of investigations by federal entities amid allegations of financial wrongdoing.
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“The company will be receiving Dh620 million in two components. First, Dh300 million cash will be paid in six monthly instalments of Dh50 million each. The remaining amount, which is Dh320 million, will be received after one year of signing the agreement,” Saba explained.
Terms of settlement
Saba said the company would enter into an agreement with a third-party custodian and escrow agent to facilitate the settlement. “The custodian will manage the sale of some assets the former chairman owns, and the consideration of these assets will be referred to the escrow agent. The escrow agent will receive the money on behalf of Union Properties,” said Saba. The escrow agent will also receive the monthly payments of Dh50 million on behalf of Union Properties and keep the first payment component until the company recovers the entire amount.
“In case there are any defaults to the payment or a breach of any of the conditions of the settlement, we can go directly to court and execute the agreement immediately,” said Saba. Any funds recovered from this litigation would be managed through an escrow account.
“It would not be directed directly to the company but through these third-party custodians, escrow agent, and the public prosecution. He explained that it would not be an arbitrary process and would be made transparent to the shareholders,” he explained.
Recovery of assets
Moreover, Amer Khansaheb, Managing Director and Board Member of Union Properties, said plots and properties sold to relatives of the former management below the market price would not be recovered. “However, we will be recovering the price difference, which is included in the settlement,” said Khansaheb. The settlement amount would also not form part of the company capital, stated Khansaheb.
Saba said the Union Properties’ team of lawyers drafted the terms and conditions of the settlement agreement and shared it with the government authorities, the public prosecution, and UAE Securities and Commodities Authority (SCA) after nine months of negotiations. “We got their blessings on it and presented it at our AGM today to get the final approval from shareholders, which we have received,” said Saba.
Despite a surge in total sales due to a recovery in Dubai’s property market, the Dubai-based developer only managed to achieve a modest level of profitability of Dh29.9 million (from a loss of Dh966.7 million) during the full financial year of 2022.
While the company’s performance improved significantly, it needed to be on par with other major developers that benefited from the Dubai property boom during the same period. However, Khansaheb did say that the property firm will focus on leveraging its existing market-leading real estate portfolio and services subsidiaries to benefit from the strong positive momentum in Dubai’s real estate markets.
“We plan to change Motor City’s master plan in the next three to five years. We will focus on building mid- to high-end residential apartments, install cycling and jogging tracks, build a public park space and increase the landscape,” he said.