Damas sees debt restructuring deal end-June
Dubai, June 3, 2010
Dubai-based Damas International said on Thursday it expected to reach a debt restructuring deal with lenders by the end of June, as the jeweller focuses on recovering assets from its founders.
Damas is in talks with banks to restructure $872 million and is operating under a standstill agreement. The lenders, some 20 banks, include foreign names like Barclays and BNP Paribas.
"The restructuring process is making good progress. Our target is end of June," Anan Fakhreddin, Damas' newly appointed chief executive, told the Reuters Global Luxury Summit.
"It covers the whole debt and breaks it down to three different groups, each under different terms and conditions."
The Dubai-based jeweller also is still trying to recover $55 million owed by its founders. Dubai's regulator in March ordered Damas to dismiss the board and pay fines for failing to exercise proper governance.
The firm's founders, including its former head, have been ordered to repay $165 million in "unauthorized transactions." The three Abdullah brothers missed the first scheduled repayment of $55 million due in April.
The skipped payment, part of a settlement agreement with the Abdullah brothers, is not considered a default, Damas has said.
"The next date is October and we expect payments to take effect during that date," Fakhreddin said, adding Damas had possession of pledged security against the repayment.
"The shares pledged by the brothers are kept in the banks and are under our control." In the meantime, Damas' focus is on asset recovery and tracking down deals made under the previous regime, Fakhreddin said.
"The recovery of assets for Damas is one of the top priorities we are focusing on... We discovered many countries where we have made investments in the past and very keen to recover all the assets that belong to Damas."
Separate talks are ongoing between Damas and its lenders and the Abdullah brothers and the banks, he said.
"Eventually we will have to arrive to one deal to regulate the whole thing that will have to be approved by the authorities," he added.
Damas' founders, Tawhid, Tawfique and Tamjid Abdullah, are no longer involved in the firm's management but still play a role, Fakhrediin said.
Damas is primarily involved in the business of trading in gold and gold jewellery, diamond jewellery, pearls, watches, silver and precious stones on a wholesale and retail basis. – Reuters