Damas International, the Middle East's largest jeweller, expects to recover just one third of the hundreds of millions of dirhams the company is owed by its previous owners.
Tawhid, Tawfiq and Tamjid Abdullah were the subject of the strictest disciplinary action in the history of the Dubai International Financial Centre in March last year for improperly withdrawing Dh365 million (US$99.3m) of cash and almost two tonnes of gold worth Dh250m from Damas without shareholder approval.
Given the current depressed market valuation of the brothers' wide-ranging assets, Damas expects to receive just Dh204m of the money owed, the company said in a statement to Nasdaq Dubai yesterday.
The valuation of the brothers' assets was calculated by an independent financial adviser, but has not taken into account the 350 million shares they own in Damas, the company said. The share price was 10 US cents yesterday.
The money owed to Damas is part of a total of Dh1.8 billion the brothers owe to a number of creditors.
Through their privately held companies, Damas Real Estate, Damas Investments and Damas Hotels, the brothers also borrowed Dh1.2bn from more than 20 banks.
A cascade agreement, which is due to last for three years, was signed early this month to manage the repayment of the total owed to all creditors.
The creditors expect to maximise their returns, but as an unsecured lender, Damas will be last to receive money it is owed.
A divestment committee will manage and review the Abdullah brothers' assets and sell them when the market improves.
Damas hopes the value of the brothers' assets will increase over the three-year repayment agreement, thus increasing the amount of money recovered.
"Recoveries could change based on the timing of the sale of the assets," Damas said yesterday.
About 80 per cent of the Dh1.8bn the brothers' borrowed was invested in property, with 90 per cent of that in the UAE. Much of the remainder was spent on equities.
In order to be repaid the whole Dh614m Damas is owed, the brothers' assets would need to increase by about 200 per cent.
Analysts say that is an unrealistic target.
The Abdullah brothers were last year banned from holding executive positions at any company in the Dubai International Financial Centre for between five and 10 years, and fined, following the disclosure of the unauthorised transactions.