Damas International has been forced to extend its payment standstill on more than Dh3 billion (US$817 million) of debt for a sixth time, as not all of its lenders have signed the agreement.
The largest gold and jewellery retailer in the Middle East announced yesterday that it had reached an agreement with some of its more than 20 lenders but was giving the remainder until the end of March to reach a decision.
"In order to allow the company and the steering committee sufficient time to obtain the final approval and signature of the bank lenders Ö the company considered that it was prudent to extend the standstill period," Damas said in a filing with Nasdaq Dubai.
The deal will allow the company to repay Dh1bn over six years and use the rest as working capital, Anan Fakhreddin, the company's chief executive, said last month.
The company has been negotiating with its creditors to restructure its debt, an arrangement it needed to remain in business.
It has had an official standstill on its principal debt payments since last March.
Damas has also been working to sign a deal with former executives who are members of the founding family to recover Dh614m owed to the company after unauthorised transactions, which included the unapproved borrowing of nearly 2 tonnes of gold from the company's holdings.
The former executives - the brothers Tawhid, Tawfique and Tamjid Abdullah - were expected to sign a repayment deal, called a cascade agreement, by the end of last month or pay Dh400m immediately.
But Damas has agreed to extend the payment deadline until the end of next month.
"The negotiation of the cascade agreement has been highly complex and has involved negotiations in excess of 20 bank lenders, including both lenders to the company and lenders to the Abdullah brothers," the company said in its filing.
Damas, which has more than 400 stores across the Middle East, has struggled since October 2009, when its then chief executive, Tawhid Abdullah, stepped down from his post after disclosing unauthorised transactions.
The transactions included property investments such as in a shopping mall in Turkey. They were conducted without proper shareholder approval.
The regulator of the Dubai International Financial Centre (DIFC) later banned the Abdullah brothers from holding executive roles with any DIFC company for between five and 10 years.
The unauthorised transactions weighed heavily on Damas's books, forcing the company into losses.
Although the jeweller's underlying retail business remained profitable, the company reported Dh1.9bn of losses in the 12 months to March 31 last year because of one-time write-offs.
The company is in the black again, realising a net profit of Dh4.2m for the six months ending on September 30.
As well as restructuring its finances, Damas has also been streamlining its retail network. Over the past six months, the jeweller has closed more than 25 underperforming stores across the region.
Damas now has 420 shops in its portfolio but is planning new boutiques in Dubai, Abu Dhabi and Saudi Arabia.