MEPCO faces lawsuit by Al Shorouk Advanced over property deed

Logo of Middle East Paper Co. (MEPCO)

Middle East Paper Co. (MEPCO) said that a real estate lawsuit was filed by Al Shorouk Advanced Development Co. against the company to demand real estate ownership proof, though a final court ruling was issued in favor of MEPCO earlier.

In a statement to Tadawul, MEPCO clarified that it earlier purchased the property in question through valid and announced auction. A judicial decision was issued to grant the company ownership of the aforementioned property. This came after MEPCO paid SAR 30 million, which was deposited by certified checks in the account of the Enforcement Court in Jeddah.

Accordingly, the court judge marked the real estate deeds to prove its ownership to MEPCO and addressed the notary public to marginalize the registry by transferring ownership to the MEPCO.

Later, it was found that an investigation was made by the Public Prosecution in Jeddah with the former owner of the land based on a complaint submitted by Al Shorouk, which claims the property ownership. Accordingly, the Public Prosecution ruled to stop dealings on the real state entrusted to its previous owner. Therefore, it was impossible to transfer the ownership to MEPCO at the notary public.

On Aug. 17, Al Shorouk filed a lawsuit against MEPCO before the General Court in Jeddah to claim the real estate ownership. The department decided that it has value jurisdiction to consider the case and requested a response to the claim on Oct. 12, after Al Shorouk submitted an assessment of the aforesaid real state from an accredited valuer at a value of SAR 217.5 million with an error rate of +/-10%.

According to the documents available on the aforementioned real state, MEPCO obtained legal advice to confirm its right to own the land in accordance with Article 54 of the Enforcement Law and related regulations. The company assumes no responsibility for the lawsuit filed against it, MEPCO.

Further, MEPCO hired an external lawyer to respond to the lawsuit and defend its interests.

It is impossible at this stage to determine the financial impact of this case. Any major updates regarding this case will be announced in due course.

The land was reclassified from property, plant and equipment to advance payments paid for the acquisition of the land until the transfer of control (transfer of ownership deeds in the records at the notary public) to the company. Accordingly, a total of SAR 30 million was reclassified to advance payments paid for the land purchase under current assets in the period ended June 2022, with comparative figures for 2021.