Dubai’s Amlak announces renegotiation of restructuring terms

Islamic mortgage provider Amlak Finance has announced the renegotiation of a restructuring deal with its financiers.

The firm said it approached financiers in September to wave “a number of restrictive covenants” in its original restructuring terms from 2014.

These included adjustments restrictions to allow for the company’s mortgage book to be maintained at higher levels, funds to be raised under certain pre-agreed parameters and the removal of restrictions on business origination.

The majority of financiers have now approved the company’s new business plan.

“Specifically, the company can increase its business origination levels without limitation on an ‘on and off balance sheet’ basis subject to regulatory caps, depending on the market demands and the company’s fund raising capacity. The new terms do not affect the repayment period or amounts, or profit payments to financiers,” it said.

Amlak’s shares were suspended from the Dubai Financial Market in November 2008 as the credit market dried up and property prices began a near 50 per cent crash.

Its shares resumed trading years later in June 2015.

Read: Dubai’s Amlak Finance shares to resume trade on June 2 after 6-year suspension

The company said since the original restructuring it had paid Dhs3.5bn ($952.8m), or 42 per cent of total outstanding debt, to its financiers.

It has also redeemed Dhs200m, or 15 per cent of its contingent convertible instrument, within the first year of restructuring.

Financiers are allowed to swap Dhs1.3bn of the original debt to a convertible instrument to be fully redeemed at the end of the 12-year restructuring period from the monetisation of Amlak’s real estate asset value growth.

“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 adding to the prospects of redeeming the contingent convertible instrument earlier than previously anticipated,” said Amlak managing director and CEO Arif Alharmi.

“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 fulfill our financial obligations to all our stakeholders.”

Amlak posted a Dhs94m profit in the first nine months of 2016.