Damas and banks reach deal over Dh1.8 million debt

A Dh1.8 billion (US$490 million) deal involving Damas International, its previous owners and more than 20 banks has been signed after months of delay.

The agreement will result in the three Abdullah brothers - Tawhid, Tawfiq and Tamjid - who previously ran the company, repaying Dh614m to Damas, the Middle East's largest jeweller. In addition, they will pay Dh1.2bn to a group of lenders.

The deal comes only a day after Damas announced a delay, as one bank had yet to agree to the terms.

Damas announced the news in a statement to Nasdaq Dubai, but the exact details of the agreement have not been disclosed.

The finalising of the deal has been delayed a number of times because of the complex nature of the negotiations.

The deal means that Damas can now proceed with a Dh3bn debt restructuring recently agreed with its own banks.

The debt will be used for working capital and investment in expansion, primarily in the jeweller's business in Saudi Arabia and the UAE.

Some 80 per cent of the Abdullah brothers' creditors are also Damas creditors.

The Abdullah brothers were the subject of the strictest disciplinary action in the history of the Dubai International Financial Centre in March last year for improperly withdrawing Dh365m of cash and nearly two tonnes of gold worth Dh250m from Damas without shareholder approval.

Through their privately held companies, Damas Real Estate, Damas Investments and Damas Hotels, the brothers also borrowed a further Dh1.2bn from numerous lenders.

In many countries across North Africa, the Middle East and Asia, the company is also trying to recover hundreds of millions of dirhams of investments, loans and payments for merchandise the three brothers made without the appropriate documentation.

The brothers sealed many deals only with a handshake, which has obliged Damas to retain them as advisers as the company tries to trace all of their transactions.

rjones@thenational.ae