LONDON (Alliance News) - Construction and property development and management business Formation Group PLC Wednesday said JV Finance Ventures Ltd is being sued by Redrow PLC subsidiaries, although JV Finance Ventures will counterclaim.
Formation Group holds a 36.88% stake in JV Finance Ventures, worth approximately GBP6.24 million.
The group said as a result of alleged legal problems in respect of a mixed use development site at 1 Commercial Street in London, Redrow has instituted legal proceedings against JV Finance Ventures and other parties.
It said Redrow is seeking to set-off an alleged damages claim against their obligation to make the payment of the balance of the purchase price under the contract relating to the sale of the property.
JV Ventures has instructed its legal advisors to advise on proceedings and to institute a counterclaim to recover the full amount of the deferred consideration together with interest, it said.
In May last year, Formation had said that Julius Properties Ltd expected to be able to repay loans provided by JV Finance Ventures after receiving the deferred part of the consideration for the sale of the property. The deferred consideration was secured by property and was due to start being paid in equal tranches starting last month.
Formation Group's shares dropped a huge 30.7% Wednesday afternoon, trading at 1.30 pence per share.
Shares in Redrow were trading 0.3% lower at 318.50 pence per share.
By Rowena Harris-Doughty; rowenaharrisdoughty@alliancenews.com; @rharrisdoughty
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Redrow (RDW)