News Column

Amlak, creditors seal $2.7 billion debt deal

August 8, 2014



Shares likely to be re-admitted for trading in early 2015



Creditors of Amlak Finance, the Dubai-based Islamic mortgage provider, have accepted the company's $2.7 billion debt-restructuring proposal, a government committee overseeing the company's restructuring said on Thursday.







The long-awaited deal by Amlak with all of its financiers was concluded after nearly six years since the mortgage company ran into financial trouble.







Sultan bin Saeed Al Mansouri, the UAE's Minister of Economy and chairman of the committee, said the deal would allow Amlak's shares to be re-admitted for trading on the Dubai Financial Market (DFM) in early 2015.







"We are very pleased that Amlak's financiers have accepted the restructuring proposal. In close collaboration with Amlak's management, "the committee" has led the discussions and negotiations with the financiers over the last two years, ultimately achieving this amicable restructuring solution," he said.







The committee expects the restructuring to be completed and fully implemented in 2014, allowing Amlak's shares to be re-admitted for trading on the DFM in early 2015.







Al Mansouri said the success of Amlak's restructuring demonstrated the government's commitment to support the UAE's financial system and its economy and to protect the public and commercial investors.







The heavily indebted Amlak had its shares suspended in late 2008 after it was hit by the global credit crunch that blocked the company's access to borrowing.







Debt crisis had also caused Amlak's prices to decline more than 50 per cent from their peak.







Amlak has been in talks with a six-member creditor committee to restructure its debt.







As per the restructuring package, which was developed in full observance of Sharia'a principles, Amlak will shortly make an initial payment of approximately Dh2 billion, with the remaining debt paid over a 12-year period, according to the statement.







Amlak will also start repaying the UAE Federal Government's liquidity support funds, over a six-year period.







As part of the deal, creditors will swap approximately Dh1.4 billion of their original debt into a "convertible instrument" which is to be fully redeemed over the next few years from monetising expected rises in the value of Amlak's real estate assets.







The company, part-owned by Emaar Properties, met lenders in June to present the deal.







Amlak reported a third-quarter loss of Dh40 million in 2011, the last time it disclosed financial results, according to filings on the DFM. ?Arif Alharmi, CEO of Amlak, said, the mortgage provider would be working closely with all its stakeholders over the next few months to implement the restructuring in order to return to market and we look forward to providing innovative products and improved services to our existing and future customers.







Amlak said due to regulatory requirements for re-admission of share trading, shareholders' approval at the Annual General Meeting, or AGM, will also be required. The AGM is provisionally scheduled to take place in the first quarter of 2015.







Since its shares were suspended from trading on the DFM, Amlak has been focusing on restructuring its balance sheet and its core property financing operations in anticipation of returning to market.







The mortgage provider has also taken a number of austerity measures to tightly manage costs, delinquencies and liquidity over the past six years, including reducing its exposure to non-core real estate assets and strengthening its collection procedures to reduce delinquencies. Amlak started to offer mortgage financing again earlier this year.







issacjohn@khaleejtimes.com


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Source: Khaleej Times (United Arab Emirates)


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