WCT Holdings Bhd jumped 2.5 sen, or 4.5 percent, to 57.5 sen Thursday morning, a day after its wholly-owned subsidiary WCT Bhd (WCTB) announced a settlement deal with Meydan Group LLC. The counter had pared some gains as of writing, but it was still up 1.5 sen, or 2.73 percent, to 56.5 sen, from a close of 55 sen on Wednesday.
WCT Holdings stated yesterday that Meydan will pay WCTB AED726.57 million (about RM828.25 million) as part of the settlement agreement related to the Nad Al Sheba Dubai Racecourse contract dispute between the two parties.
The settlement amount is equivalent to 65 percent of the principle sum of AED1.15 billion awarded to WCTB earlier by Dubai’s Arbitral Tribunal under the final judgement in relation to the case, according to a Bursa Malaysia filing yesterday.
Meydan will pay the RM828.25 million final settlement payment in two parts, according to WCT Holdings, with the second tranche divided into 12 equal quarterly instalments.
The RM828 million settlement announced by WCT Holdings for its abandoned Dubai racetrack development project after 12 years of dispute, according to CGS-CIMB Research, should remove the overhang on its share price linked to unresolved contract arbitrations.
“Given the cashflow difficulties and earnings risks caused by the ongoing Covid-19 lockdowns, we believe this positive development is timely. WCT will use the incoming total cash of RM361 million (due on July 20 and October 20) primarily for Sukuk repayment of approximately RM200 million (due in October) and the remaining RM161 million for working capital purposes, primarily to defray operating fixed costs across all of its divisions (construction, property development, and property investment — retail malls and hotels); implying a negligible impact on the stock market “The stock has a call and a target price of 67 sen.
WCT’s RM828 million Dubai litigation settlement should reduce its share price overhang, according to CGS-CIMB
In the ultimate settlement of the Dubai racetrack dispute, a unit of WCT Holdings receives RM828 million./n
