BLand reaches settlement with South Korea on Jeju Airest City dispute

KUALA LUMPUR (June 30): Berjaya Land Bhd says the South Korean government has agreed to pay the company 125 billion Korean won (about RM443.88 million) as part of an agreement to settle their five-year dispute over the Jeju Airest City project in South Korea.

The dispute arose from a 2009 land sale agreement for the Jeju Airest City project, which was inked between South Korea’s Jeju Free International City Development Center (JDC) and Berjaya Jeju Resort Ltd (BJR).

BJR — the master developer of the project — was at the time 72.6%-owned by BLand through Berjaya Leisure (Cayman) Ltd (BLCL), with JDC holding another 19%. BJR also has Swan Street Partners LLC (SSP) as an investor.

BLand claimed that JDC had breached certain conditions in the land sale and purchase agreement (SPA). Subsequently, BJR filed legal proceedings against JDC in November 2015.

In a filing today, BLand said BLCL, BJR, and SSP have entered into a settlement agreement with JDC on the matter.

Under the settlement, JDC will pay 125 billion Korean won to BLCL and SSP as compensation for damages incurred as joint venture partners of JDC in BJR.

JDC will also pay an unspecified sum as compensation to BJR, which BJR will use to repay its liabilities, including debt to the project’s main contractor, POSCO Engineering and Construction Co Ltd, and part of its loan from BLCL.

In exchange, BLCL and SSP will transfer their stakes in BJR to JDC.

“The estimated total settlement sum to be received by BLCL from the damages and land SPA damages, net of relevant taxes and expenses, is estimated to be about 102 billion Korean won (approximately RM362.19 million),” said BLand.

However, BLand said the settlement will not have material effect on its earnings, net assets and gearing for the financial year ended June 30, 2020.

The Jeju Airest City project was previously touted as a 183.8-acre integrated resort development with an estimated gross development value of US$2.4 billion (RM10.34 billion).

Shares of BLand closed unchanged at 17 sen today, valuing the group at RM850.06 million.