Sunday, September 19, 2010

Damas - Board Undertakes Further "Progress" in "Enforcing" Enforceable Undertaking

Actual Cascade Agreement.
Look closely for the water.  
DIL shares in green.
Damas' Board announced on NasdaqDubai further developments related to the Abdullah Brothers and the DFSA mandated Enforceable Undertaking.

Damas is getting ready to sign a Cascade Agreement with the Flying Abdullah Brothers and their two companies Damas Real Estate LLC and Damas Investments Limited. as well as these entities' other lenders. 

Under the proposed CA Damas will agree:

(a)   not to enforce its rights under the settlement agreement dated 10 October 2009 between, amongst others, the Abdullah Brothers and DIL; and
(b)  not to enforce its rights under the share pledge (the "DIL Share Pledge") granted by the Abdullah Brothers on 31 October 2009 in favour of DIL in respect of 350 million shares in DIL (the "DIL Pledged Shares").
I presume that DIL is just agreeing to forbearance on its rights above.  That is, it has not renounced these rights nor is it sharing the DIL Pledged Shares with the other lenders.  This sort of inter lender agreement is fairly common.  The operative presumption being that if one creditor moves to exercise its rights it could bring the debtor down thus hurting all the parties. So it's an agreement among the lenders to move in tandem.

It's probably a safe bet that the FAB were consistently "wise" investors.  Thus, they probably used the loans from other lenders to finance similar "great" investments in real estate, etc. as they ones they made with the money they stole, excuse me, "withdrew without proper documentation" from DIL.  Which suggests that the cash flow may well be as depicted above.  In such a case one wouldn't want to be at the tail end of the cascade.

Not much that could be done.  They say (and they are so often right that I don't even bother to contradict them anymore) that Mar Jude is the Patron Saint of Bank Loan Workout Groups.  Where's Amos Yaqub when DIL needs him? He's got a special "in" with Mar Jude.

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