Damas compensates Saudi firm with 20 million shares
Published: Sep 1, 2010 23:37 Updated: Mar 8, 2011 20:01
DUBAI: Saudi private equity firm Amwal Al-Khaleej has received 20 million shares of Damas International as part of a settlement deal with the company’s founder Abdullah Brothers and Damas Investments, revealed the Dubai-based jewelry retailer.
The shares, which were transferred on Aug. 19, were priced at 16 cents a share and a value of $3.2 million, the company said in a statement to Nasdaq Dubai on Wednesday.
The move increased Amwal’s shareholding in the company to 13.26 percent from 11.23 percent after the transaction, it added.
Amwal Al-Khaleej filed a claim at the Dubai International Financial Center courts, saying that the jewelry giant did not pay for shares it acquired before Damas went public two years ago. The Saudi firm also sought the return of its shares or a payment of $22 million with interest.
“This claim is now in the process of being dropped from the courts as a result of the parties having reached a satisfactory and amicable settlement,” said Ammar Al-Khudairy, managing director of Amwal Al-Khaleej. “The settlement agreement will put an end to our legal dispute.”
The lawsuit alleged that the Abdullah Brothers agreed to buy 22,042,694 of Amwal shares at $1 a share in an agreement dated June 16, 2008, two weeks before the jewelry firm was scheduled to make a public offering of 25 percent of its stock. The Saudi firm said the shares were transferred but its founders failed to pay $22 million.
Last month, Damas announced a full-year loss of a $529 million, one of largest ever for a public company in the UAE.
The Dubai-based jeweler, which has struggled for the past year to come to terms with hundreds of millions of dollars’ worth of transactions made by its former management without the approval of shareholders, said in July it had extended to Sept. 30 a standstill agreement with lenders on $872 million in debt.
Damas, which has been in talks with banks to restructure its debt, said the extension will allow the company to finalize its restructuring plan. The lenders, some 20 banks, include foreign names like Barclays and BNP Paribas.
According to the company’s auditors, Damas may face “significant uncertainty” to operate its business if the jeweler is unable to execute its restructuring plan or extend a debt standstill agreement. “In the event that the financial restructuring plan is not signed as envisaged or the standstill agreement is not extended further, there could be significant uncertainty over the ability of the group to continue operating as a going concern,” said Ernst & Young, in a letter published on the bourse’s website.
Damas’ former chief executive Tawhid Abdullah stepped down in October last year after disclosing to the board he had made “unauthorized transactions” worth $145 million, including more than 50 deals, mainly in property.
Two tons of gold borrowed by the brothers Tawhid, Tawfique and Tamjid Abdullah, members of the company’s founding family, also sparked controversy.
