x Abu Dhabi, UAEMonday 22 January 2018

Shuaa may buy back Dh1.5bn bond

The investment bank may purchase some or all of the issue it sold to Dubai Banking Group.

The investment bank Shuaa Capital may buy back some or all of a Dh1.5 billion (US$408.4 million) convertible bond issued to Dubai Banking Group. Shuaa agreed to extend the deadline to reach an agreement with Dubai Banking Group until June 4, the bank said in a statement on the Dubai Financial Market website, where its shares are traded. Talks between the two companies have stalled since November and both parties are no longer considering the option of extending the maturity of the bond by up to two years.

"DGB has also since withdrawn its requirement for representation on Shuaa's board of directors," Shuaa said. More recent negotiations have focused on finding a mutually agreeable resolution. Shuaa remains confident of its legal position, saying "both parties recognise that a resolution cannot be deferred indefinitely". "[The] Shuaa board continues to work very diligently to balance between the practical value of attempting to address the expressed concerns of a major shareholder and avoiding the uncertainty and disruption that would be created by a formal confrontation, while defending the company legal rights," the statement said.

Shuaa shareholders were asked to consider the continuation or dissolution of the company last month. Under the law, shareholders have the option to dissolve a company if its annual losses amount to more than half its capital. Last year, Shuaa posted a Dh949m loss, compared with Dh550m in capital. However, shareholders voted unanimously to give the board of directors blanket permission to renegotiate the terms of the bond, also allowing Shuaa to issue more shares to pay for the bond should this become necessary.