Amlak Finance renegotiates 2014 debt restructuring deal

The company said as part of the changes to the terms that it has also swapped Dh1.3 billion of the original debt to an unspecified convertible instrument that will be fully redeemed by the end of the 12-year period.

Amlak said that since the restructuring in 2014 that it has paid Dh3.5 billion, or 42 per cent of total debts outstanding, to its financiers. Sammy Dallal / The National

Amlak Finance, the Sharia-compliant real estate financier, said that it has renegotiated part of its 2014 debt restructuring deal that will help it raise more business following disappointing third-quarter earnings.

The company, based in Dubai, said as part of the changes to the terms that it has also swapped Dh1.3 billion of the original debt to an unspecified convertible instrument that will be fully redeemed by the end of a 12- year period.

“The new business plan will have a positive impact on the company and is designed to strengthen our financial and business viability on a long-term basis,” said Arif Alharmi, managing director and chief executive of Amlak.

“Of course one cannot accurately predict the economy and its fluctuations, but I remain confident that this newly negotiated deal will allow us the flexibility to ensure we remain profitable and able to fulfil our financial obligations to all our stakeholders.”

Amlak said that it approached its creditors in September 2016 to waive a number of “restrictive covenants which included adjustments to certain restrictions to allow for the company’s mortgage book to be maintained at higher anticipated levels, funds to be raised under certain pre-agreed parameters and restrictions on business origination to be removed”.

The company did not immediately respond to questions about the terms of the deal. It said that since the restructuring in 2014 that it has paid Dh3.5bn, or 42 per cent of total debts outstanding, to its financiers.

Amlak in November reported a third-quarter plunge in profit as it made less money from land sales. Profit in the three months that ended September 30 fell to Dh5.6 million from Dh55.4m a year earlier.

The mortgage company said it had experienced “some volatility” in the period because substantial revenues generated from land plot sales earlier in the year had not continued at the same pace.

The property financier was hit hard by the 2008 collapse in real estate prices and the ensuing global financial crisis has embarked on a cost-cutting drive.

Shares of Amlak resumed trading on the Dubai Financial Market in June after a six-year hiatus. The shares were suspended in November 2008 after fears of a creditor exodus led the company to the brink of insolvency.

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