Court orders Chemanol to pay SAR 15.39M in acquisition-related dispute

Chemanol loses appeal in SAR 15.39M in ADDAR dispute

Methanol Chemicals Co. (Chemanol) said the Commercial Court of Appeal in Dammam upheld a previous first-instance ruling ordering the company to pay SAR 15.39 million to the former owners of ADDAR Chemicals Co. (ACC).

In a statement to Tadawul, the company said the amount relates to payments previously made by the former owners to cover a bank financing facility and ACC’s operating expenses through Nov. 2023.

Chemanol explained that the claim arose from an agreement concluded between its former board of directors and ACC former owners, under which Chemanol undertook to pay the operating expenses incurred by the former owners from the signing of the preliminary acquisition agreement on June 18, 2023 until the execution of the final agreement to purchase shares in ADDAR Chemicals in November 2023.

The ruling was based on an acknowledgment issued by Chemanol during the tenure of its former board. It expressed reservations regarding the circumstances surrounding the issuance of that acknowledgment and the extent to which the interests of the company and its shareholders were taken into account when it was issued and the resulting financial obligations were incurred.

Chemanol affirmed that it would consider the findings and outcomes of the related criminal investigation, and any facts and findings arising from it that relate to the subject matter of the claim, as it completes its assessment of all aspects of its legal position, in coordination with a specialized law firm, to evaluate the legal options and procedures available in relation to the ruling, including the possibility of appealing it.

The company also reiterated that it reserves all its statutory and legal rights to take necessary action against any party found responsible for causing damage to the company through the related actions, in accordance with applicable laws and regulations.

The company added that it will disclose any material developments in this regard in accordance with applicable laws and regulations.

According to data compiled by Argaam, Chemanol announced last January that the Commercial Court in Dammam had accepted a request by former owners of ADDAR Chemicals, which was acquired during the tenure of Chemanol's previous board, to amend the claim amount in the lawsuit to SAR 185.22 million from SAR 45.11 million.

The claims included a demand for Chemanol to reimburse SAR 15.4 million paid by the former owners to cover a bank financing facility and ADDAR Chemicals’ operating expenses through November 2023.