Resolution reached in Walls Construction shareholder dispute

A resolution has been reached in a dispute between shareholders in Walls Construction over a proposed “growth share scheme” the firm said had been designed to reward and incentivise new management.

The case came before the Commercial Court last month, when Mr Justice Denis McDonald was told the parties would try to resolve their differences via out-of-court mediation.

On Monday, lawyers informed the judge that this approach had led to a settlement of the case. This will take some time to be implemented, the court heard.

The Irish building firm, which had a €472 million turnover in 2022, had alleged in defence of the case against it that it had the required shareholder and company consent for its growth share scheme.

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The proposal involves issuing growth shares (having no rights until financial thresholds are achieved) representing 20 per cent of WCHL. The company said the plan would see the next generation of management gain equity in the business with attached economic rights triggered if certain financial targets are met.

McSorley Investments Limited, a 20 per cent shareholder in Walls Construction Limited, issued its proceedings over alleged fears its interests would be diluted and oppressed by the proposals.

The investment vehicle was formed several years ago to hold Walls Construction Holding Limited (WCHL) shares belonging to members of the extended Wall family. WCHL wholly owns the shares in the construction firm, which was founded in 1950 by PJ Walls.

WCHL says it made an €18 million pretax profit in 2022. It recently completed a fit-out of Google’s offices in the old Boland’s Mills in Dublin’s docklands and it was management contractor for LinkedIn’s new headquarters at Wilton Place, Dublin 2.

Walls Construction chief executive Eugene O’Shea said the scheme was due to be approved more than a month ago but meetings had to be deferred. McSorley Investments issued its lawsuit against Mr O’Shea, WCHL and several of its board of directors before the adjourned meeting could occur.

The defendants said their proposal was “entirely in keeping” with a 2015 agreement that sets out how WCHL should operate and how relations between investors and shareholders should be regulated.

In its legal documents, McSorley Investments expressed concerns about the “high” volume of shares to be allotted and potential tax implications of the scheme.

In a sworn statement to the court, the founder’s son, also named PJ Walls, who is a director of McSorley Investments and WCHL, alleged the defendants were “forcing a dilution of shareholding” on McSorley Investments in a manner that was “unfair and oppressive”.

Hearing on Monday that the case had been settled, Mr Justice McDonald congratulated the parties on reaching an early resolution.

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