CBC and Lidl reach partial agreement in Żebbuġ development dispute

Central Business Centres (CBC) has reached a partial agreement with Lidl Malta in a contractual dispute over the redevelopment of the former Cortis Woodworks site in Żebbuġ, leading the company to halt legal action it had previously taken against the retailer.

In a statement issued on Thursday, CBC said that following several meetings between the parties, it was agreed that Lidl would extend the works bank guarantee for an additional period. The extension is intended to allow sufficient time for the completion of outstanding works and for the handover of part of the Żebbuġ property to CBC in line with the terms of the original deed.

The company added that while progress has been made, unresolved issues between the two sides will now be referred to arbitration. In light of the partial agreement, CBC confirmed it has stopped its actions against Lidl, including the claim it had lodged on the bank guarantee.

The dispute became public at the end of December, when CBC announced it had registered a formal dispute and frozen funds belonging to Lidl Malta in the form of a bank guarantee. CBC had accused Lidl of failing to hand over part of the site as agreed and of not completing certain works to the required standard.

The disagreement stems from an emphyteutical deed signed in 2017, which allowed Lidl to redevelop the former woodworks factory into a supermarket. As part of the agreement, Lidl was also obliged to construct an underground level for CBC. That level was originally expected to be completed by the end of the third quarter of 2025.

CBC had said the frozen funds would be used to finance works it claimed Lidl had failed to carry out, as well as to offset damages allegedly suffered as a result of delays and shortcomings in the project.

The dispute emerged at a sensitive time for CBC, which is facing significant financial commitments, including the maturity of a €3 million bond issued a decade ago and the repayment of a further €3 million in unsecured callable notes issued last year.

In its latest statement, CBC said it would keep the public and stakeholders informed of any further developments as the arbitration process unfolds.