REAL ESTATE - Fund management firm Aberdeen is to pay Real Estate Opportunities (REO) £30m (€44m) to settle a lawsuit brought by the split capital trust.
Aberdeen and Swiss bank UBS, which REO also sued, advised REO on a 2001 listing involving 300m ordinary shares, 75m zero dividend preference shares and £125m convertible unsecured loan stock.
In a suit first brought in June 2005, REO claimed the advisers failed in their duty to "provide it with advice in relation to the flotation, the financial model to be adopted upon its flotation, the proposed content of the listing particulars and the investment objectives and policy to be adopted by REO".
REO also claimed Aberdeen "acted in breach of contract and duty" in making investments during the same period. The value of the trust subsequently collapsed.
As part of the settlement announced recently, Aberdeen has withdrawn a counterclaim against REO over unpaid management fees. The parties have not disclosed further details of the settlement.
A spokeswoman for Aberdeen emphasised that the fund manager had accepted neither liability nor the claims made against it.
She said it had agreed to settle because "it’s in the best interests of the group and the shareholders to do so".
This is not the first ‘split-cap’ case to cost Aberdeen in recent years. In 2005 it agreed to pay £35m to a compensation fund for investors hit by split-cap underperformance.