The Abdullah brothers have resolved their US$22 million legal dispute with Amwal AlKhaleej after transferring 20 million shares in Damas International.
Abdullahs settle $22m claim
The Abdullah brothers have resolved their US$22 million (Dh80.79m) legal dispute with Amwal AlKhaleej after transferring 20 million shares in Damas International to the Saudi private equity company as part of a settlement. Amwal AlKhaleej sued the brothers, who are majority shareholders of Damas International, after accusing the jewellery retailer of not paying for shares it acquired before the Dubai company went public in 2008.
The settlement of the dispute clears a major hurdle for Tawfique, Tawhid and Tamjid Abdullah, who already owe Dh606m to Damas International after making "unauthorised transactions" at the company without the approval of shareholders. Ammar al Khudairy, the chief executive of Amwal AlKhaleej, said the $22m claim at the Dubai International Financial Centre Courts was being dropped. "We got what we were aiming to get, and it's much better to do something like this out of court than in court," Mr al Khudairy said. "So we are very satisfied with the outcome."
Amwal AlKhaleej was an early investor in Damas, buying an $82.5m stake in June 2008. During the initial public offering (IPO) later that year it sold off a portion, reducing its stake in the jeweller. The company, based in Riyadh, later alleged the brothers had agreed to buy more than 22 million of its shares in Damas at $1 a share in an agreement dated June 16 2008 - two weeks before Damas's IPO of 25 per cent of its stock.
After the firm transferred the shares to the brothers they did not pay the $22m owed, Amwal AlKhaleej alleged in court documents obtained by The National. Last November the Abdullah brothers agreed to make a partial payment of $9.2m for 9,750 shares but did not make it, according to the documents. Amwal AlKhaleej later sued, asking for the return of its 22 million shares or payment of $22m with interest. Mr al Khudairy would not disclose details of the out-of-court settlement but said the shares transfer and compensation were part of the deal.
The shares, worth $3.2m, were transferred on August 11 between Amwal AlKhaleej, the Abdullah brothers and Damas Investments, the company owned by the brothers, Damas said in a statement to the NASDAQ Dubai yesterday. This brings Amwal AlKhaleej's share of Damas International from 11.23 per cent to 13.26 per cent, the statement said. As of March 31, the Abdullah brothers' share in Damas International stood at about 551 million of 989 million shares, representing about 55 per cent, according to Damas' annual report.
The transfer of the Abdullah brothers' 20 million shares represents only a fraction, but comes in addition to 350 million shares the brothers have already pledged to return to the company if they did not repay back the Dh606m owed. These unauthorised transactions involved at least 50 deals, mainly in property, such as investments in a shopping mall in Turkey and a resort in Fujairah, and nearly two tonnes of gold.
In August, Damas International revealed a Dh1.9 billion loss for the financial year to March 31. While its retail business was profitable, the losses stemmed from lower sales and Dh1.9bn in one-time write-offs, some related to the brothers' transactions. The brothers originally signed a deal to repay the Dh606m over 18 months. But Damas is now trying to sign a new three-year "cascade agreement" alongside as a co-creditor with the other parties to which the brothers owe money.
Damas aims to sign this repayment deal by the end of September, alongside a Dh3bn debt restructuring agreement with more than 20 lenders. email@example.com