Damas Debt Restructuring Deal Near?

The National reports that Damas may be near to striking a deal with its lenders to restructure some AED3.2 billion (US$812.7 million).  That number seemed a "tad" high based on my recollection of their31 March 2009 financials.  If you look at Damas' 30 September 2009 financials, you'll see that that amount is the total of all liabilities.  Bank debt is some AED1.028 billion (US$280.1 million).  This is the amount to be restructured with the banks.  The Directors' Loan of AED150 million is likely to be set off against the Abdullah Brothers' obligations to the Company.

The Company reportedly has about 20 lenders.  It has been negotiating with an informal steering committee comprised of  Standard Chartered, HSBC, Emirates NBD, Mashreqbank, Gulf International Bank and ABN Amro.

The recent DFSA action should give the lenders comfort that the most abusive of the corporate looting is now over.  The DFSA Enforceable Undertaking will remove many but not all of those who were  atctive participants or complicit.   I would expect the banks to ask for the heads of the remaining members of  senior management as part of the restructuring deal.

Probably the best recovery for the banks is via a restructuring.  The Company has a complicated web of subsidiaries and affiliates with a jury-rigged ownership structure to get around constraints in other countries on "foreign" ownership.  Getting comfortable with all this will be another headache for the bankers.