Dubai: Dubai developer Union Properties signed a Dh620 million settlement agreement with its former chairman Khalifa Al Hammadi, his family members and others, according to a bourse filing on the Dubai Financial Market (DFM).
In a separate filing on DFM, the property developer reiterated that it would appoint a third-party custodian and escrow agent for the settlement deal in two weeks from Thursday, July 13, as all funds recovered from this litigation would be managed through an escrow account, explained Fadi Saba, Board Secretary of Union Properties.
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“The timeline is dependent on the execution of the agreement and the timely payment of instalments while strictly adhering to the settlement agreement’s provisions without any violations,” said the statement.
Following the Union Properties Annual General Meeting (AGM) in April, the developer said the total settlement amount of Dh620 million would be paid in two tranches. The first one of Dh300 million will be paid in monthly instalments over six months, with each monthly instalment amounting to Dh50 million. The second instalment of Dh 320 million will be paid one year after the execution of the settlement, said Saba.
The developer’s former chairman Al Hammadi and three other board members were dismissed in November 2021 after the UAE public prosecutor began investigations into financial irregularity claim that one of the developer’s properties had been sold for less than its value.
For Q1-2023, the company saw a net profit total of Dh12.3 million from a Dh12.5 million loss a year ago. The company is working to restructure, sell off around Dh1 billion of assets, and secure a viable future.
According to its first-quarter earnings, revenue from customer contracts rose to Dh122.1 million, up 16 per cent, as the group’s subsidiaries continued to deliver robust performance improvements. Union Properties still has accumulated losses of Dh2.8 billion, which as a percentage of the capital is 67.7 per cent. During a press conference in April, Amer Khansaheb, Managing Director and Board Member of Union Properties said the settlement amount would also not form part of the company capital.
In its latest filing, Saba explained that the financial impact from the settlement would be reflected during the contract period under the category’ other income from settlement’. This is expected to have a positive effect on reducing accumulated losses.
