Darco settles dispute with former deputy chairman, to receive S$1m ex gratia payment

DARCO Water Technologies is to receive an ex gratia payment of S$1 million from its former non-executive deputy chairman Wang Zhi, following formal mediation of a dispute between both parties.

Wang is to make payment within 14 days of the settlement agreement on Jul 15, Darco said in a bourse filing on Monday (Jul 18).

Darco, a water and wastewater treatment solutions company, had earlier sought compensation of S$2 million after it rejected an investment proposal made by Wang on an alternative water treatment asset.

Wang, however, had taken the position that he was “not obliged” to pay the compensation sum.

To settle the dispute, both parties had agreed to formal mediation.

Under the terms of the settlement post-mediation, Darco must pay Wang a sum of S$1 million on top of any agreed consideration if it decides to acquire any water or environmental treatment asset owned by Wang in future.

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Both parties have also agreed to bear their own legal costs and expenses.

Shares of Darco Water closed flat at S$0.14 on Friday before the announcement.

Wang is Darco’s single largest shareholder, according to the company’s latest annual report, with a stake of 45.1 per cent as at Mar 22.

He first emerged as a substantial shareholder in March 2018, following a placement of shares by Darco to Wang. Wang was appointed to Darco’s board the following month.

In its announcement at the time, Darco had described Wang as having 15 years’ experience in the business of water and wastewater treatments, and water supply. He was also the majority owner of 4 build-operate-transfer or build-operate-own water supply and wastewater treatment plants, the company said.

As part of the placement agreement, Wang was to “procure the transfer to the company” of a water treatment asset or concession with an internal rate of return of not less than 12 per cent.

Should the board reject the proposed investment, or should Wang fail to complete the transaction, Wang was to pay a compensation sum of S$2 million.

In November 2018, Darco had proposed to buy a wastewater treatment plant from Wang. This investment was in September 2021 deemed unsuitable, and Wang had proposed an alternative asset. This, too, was pronounced unsuitable earlier this year.

Wang stepped down from the board of Darco in April 2021.