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Sasseur Reit reaches settlement with Chinese construction firm
SASSEUR Reit on Thursday said that following legal proceedings and negotiations between Hefei Sasseur Commercial Management Co (Sasseur Hefei), Zhongjian Sanju No 2 Construction Engineering (ZS2) and their lawyers, the parties have reached a voluntary settlement of 55 million yuan (S$10.6 million), which Sasseur Hefei will pay to ZS2.
Sasseur Hefei is a wholly-owned subsidiary of Sasseur Reit.
This is an update on the litigation by ZS2 against Sasseur Hefei in the Anhui Higher People's Court, Anhui City, China.
The action by ZS2 against Sasseur Hefei arose out of a disagreement between Sasseur Cayman Holding and ZS2 over the construction sum payable for Sasseur Hefei's outlets which were completed in May 2016.
ZS2's claim was for a sum of about 148.4 million yuan and its legal costs.
The parties have since entered into a settlement agreement and its terms are legally binding.
The final settlement amount is due to be paid before Nov 29, 2019.
The board of Sasseur Reit said that the terms of the final settlement are expected to have no impact on the Reit's distribution per unit and no material impact on its net asset value for FY19.
Sasseur Reit in its sales and purchase agreement with ZS2 in Nov 2017 had included a sum of 117.5 million yuan for construction accounts payables. The final voluntary settlement of 55 million yuan was thus 62.5 million yuan lower than budgeted.(see clarification note)
Clarification note: Sasseur Reit has requested to clarify that the final voluntary settlement is lower than it had initially budgeted.