Bahraini firm sued in Oman
By ARTHUR MACDONALD, March 18, 2008
A Bahraini company is facing court action in Oman after its partners accused it of illegally acquiring a majority stake in a multi-billion dollar project to build an entirely new city.
However, AAJ Holdings Company (AAJHC) said it was an unlawful attempt to force it out of the $15 to $20 billion Blue City development and is now appealing to the Omani government to intervene, said a report in Gulf Daily News, our sister publication.
The firm owns 70 per cent of the shares in Ocean Developments, the holding company behind the project.
But legal action is now being taken against it by its partner Cyclone LLC, AAJHC chairman and chief executive officer Ahmed Abubaker Janahi revealed on Monday.
He said a suit had been filed against his company in the Omani courts and claimed an injunction order had been granted, which stopped AAJHC from exercising its rights associated with shares it owns in Ocean Developments until a judgement is handed down by the court.'
He said this meant Cyclone had been managing the project without any involvement by AAJHC, claiming the Omani partners had initially demanded 20 per cent of the Bahraini company's shares.
'An immediate intervention by the Omani government is now crucial, seeing as the minority shareholder is currently in full control of the project and has actively and independently started sales, disbursements and generating revenues - the whereabouts of which still remain unknown to AAJHC,' Janahi told a Press conference at the Movenpick Hotel.
'We have been wrongly and completely shut out with all references and our logo unduly removed from the project.'
Prior to AAJHC entering into the project as a strategic partner, investment rights to the 32 sq km project were granted to Al Sawadi Investments and Tourism Company by the Omani government on an exclusive 75-year basis.
Janahi said Al Sawadi failed to develop the land for almost five years, which is why AAJHC was brought in.
'It approached AAJHC, which developed the project concept by preparing the necessary business, feasibility and architectural plans with phased development implementation programmes and tapped into its international network of banking relationships to secure the $925 million required to fund phase one of the project,' he claimed.
'Since then, AAJHC was the major stakeholder in the project - being the registered owner of 70pc of the shares of Al Sawadi Investments and Tourism Company, which it has acquired through documents legally registered at the Commerce and Industry Ministry in Oman.
'Cyclone was the Omani shareholder owning the remainder of the shares.'
Janahi claimed the dispute between AAJHC and its Omani partners began after phase one funding was secured.
'This funding resulted in the escalation of the project's land value from $83 million to over $1 billion for phase one alone and is further expected to increase to $20bn over the remainder of the life of the project, which in turn dramatically increases the value of the shares,' he said.
Janahi also claimed AAJHC would have negotiated with its Omani partners to sell 20pc of its shares, meaning it would become a 50-50 venture.
'Our investment, including the money generated from various sources for the project, will come to more than $100 million,' he added.-TradeArabia News Service