x Abu Dhabi, UAETuesday 25 July 2017

Damas deal on Dh1.8 billion Abdullah Brothers debt delayed again

An April deadline for a final agreement on Dh1.8 billion owed by the Abdullah Brothers to Damas International has been extended yet again.

Ongoing negotiations to ensure the Abdullah Brothers, the previous owners of Damas International, repay Dh1.8 billion to a collection of lenders and the company, have again been delayed.

A date for the agreement to be signed was previously fixed for the end of April, but this has now been extended to the end of May to allow one final bank to agree the terms of a deal, Damas said today in a statement today to Nasdaq Dubai.

The company, which is the Middle East's largest jeweler, is owed Dh614 million by the Abdullah Brothers - Tawfique, Tawhid and Tamjid - after the trio withdrew cash and gold from the company without shareholder approval while running the company.

Through their privately held companies, Damas Real Estate, Damas Investments and Damas Hotels, the brothers also owe a further Dh1.2bn to a collection of lenders, with a total Dh1.8bn currently being negotiated.

The so-called "cascade agreement" has been delayed a number of times due to the complex nature of the negotiations that include criss-crossing of guarantees, varying ownership structures and a mix of secured and unsecured debt arrangements.

The agreement is expected to last three years to increase the potential value of any Abdullah assets sold should market conditions improve.

A signature on the deal is critical for Damas, because it will allow the company to proceed with a Dh3bn debt restructuring recently agreed with its own banks.

This will be used for working capital and loans for investment in expansion, which will focus on the jeweler's business in Saudi Arabia and the UAE.

Damas's corporate debt restructuring comprises loans worth Dh1.1bn and a working capital agreement worth Dh1.9bn.

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 proper documentation.

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

About 80 per cent of the brothers' creditors are the same as the creditors of the company.