Damas is set to pay back Dh35m it owes a creditor and hopes to reduce this amount with the sale of some assets.
Damas in talks to repay Dh35m
Damas International is in talks with one of its creditors to repay a Dh35 million (US$9.5m) liability.
The jeweller expects to sign a deal with a lender in the "near future" to ensure repayment of the money, it said in a statement to Nasdaq Dubai yesterday.
Details about why Damas originally borrowed the money or the reasons for repaying it now were unclear and the company declined to comment further.
"Damas International announces that it is in the final stages of negotiations in connection with the resolution of a known potential liability of up to Dh35m, following ongoing discussions," the company said in the statement. "This amount may be reduced by the proceeds of sale in due course of an asset which has been held as collateral by the creditor for some time."
In May, Damas repaid Dh200m of loans to banks and successfully completed a Dh3 billion debt restructuring in which it is to repay Dh1.1bn of loans over three years and receive working capital of Dh1.9bn.
The jeweller did not say whether the Dh35m it is to repay is part of this deal reached with a consortium of lenders.
"The company notes that, whilst there is no certainty that a settlement agreement will be signed between the parties, the key terms of any final signed agreement will be reported to the market in more detail pursuant to the company's ongoing disclosure obligations," Damas said.
The jeweller is owed hundreds of millions of dirhams from investments and loans it made worldwide. It recently set up a recovery task force with the sole aim of recouping more than Dh337m, which represents Damas's share of proceeds from exiting foreign ventures.
Once a darling of investors, Damas was forced to restructure its business after unauthorised transactions totalling $165m were revealed in 2009.
The disclosure sparked an investigation in which it was found that three brothers who owned the company before it went public had improperly withdrawn Dh365m of cash and nearly two tonnes of gold, valued at Dh250m, from Damas without shareholder approval.
As a result, in March last year, the brothers - Tawhid, Tawfiq and Tamjid Abdullah - were the subject of the strictest disciplinary action in the history of the Dubai International Financial Centre.
The three men still owe Damas more than Dh600m and, separately, Dh1.2bn to banks, bringing their total obligations to Dh1.8bn.
Damas has set a time frame of three years for the money to be repaid, in the hope that in that time, assets of the Abdullah brothers will have increased sufficiently in value to sell.
Much of the money that Damas is trying to recover from ventures around the world was committed by the Abdullah brothers making deals with handshakes and without proper documentation. Because of this, the brothers were kept on as advisers at the company to help recover money owed to the company.
Damas is trying to turn around its business and focus on key markets in the Middle East, particularly Saudi Arabia. The company reported a Dh53.3m profit for the year to the end of March, reversing a Dh2bn loss in its previous financial year.