Amlak Finance PJSC (AMLAK), the Islamic mortgage provider restructuring more than $2 billion of loans, proposed to extend the maturity of the debt by 15 years and reduce the amount by 30 percent, two people familiar with the matter said.
The Dubai-based company part-owned by Emaar Properties PJSC (EMAAR) will make earlier payments if cash flow allows, said the people, asking not to be identified because the matter is private. The current business plan of Amlak, which is estimated to owe about 10 billion dirhams ($2.7 billion), is to refocus on mortgage lending rather than developing properties, the people said.
The creditor committee, which is being advised by PricewaterhouseCoopers LLP, should respond to the company with an indicative term sheet this month, one of the people said. Emirates NBD PJSC is chairing the committee, which also includes Standard Chartered Plc (STAN), Dubai Islamic Bank PJSC, Abu Dhabi Islamic Bank PJSC (ADIB), Dubai’s Department of Finance and the National Bonds Corp. KPMG LLP is advising Amlak.
Spokesmen for Amlak, ADIB, DIB, National Bonds, PricewaterhouseCoopers, KPMG and the Dubai Media Office didn’t immediately respond to requests for comment, while those for Standard Chartered and Emirates NBD declined to comment.
Shares of Amlak and Tamweel PJSC (TAMWEEL), another Dubai-based Islamic mortgage company, were suspended in November 2008 after the global credit crisis blocked their access to borrowing. Amlak reported a third-quarter loss of 40 million dirhams in 2011, the last time the lender disclosed financial results, according to filings on the Dubai Financial Market. Tamweel was taken over by Dubai Islamic Bank PJSC. (DIB)
Dubai’s property industry is recovering from a 65 percent slump in home prices in the aftermath of the 2008 crash. The average price of a mid-range villa in Dubai increased 44 percent in the year to April to the highest since November 2008, according to Cluttons LLC data on Bloomberg.
Amlak’s liabilities were reduced by 4 billion dirhams in March 2012 after it sold land and reached agreements with some creditors. A government committee restructuring the company decided not to liquidate to protect the rights of shareholders, United Arab Emirates’ Economy Minister Sultan Bin Saeed al-Mansouri said at the time.
In January, al-Mansouri said the restructuring may be resolved in the second quarter.
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