Islamic Finance

Dubai Islamic mortgage provider Amlak achieves 95% approval for debt restructuring

Shariah-compliant real estate financier Amlak has achieved 95% approval on its debt restructuring terms, it said on Wednesday (Jan 8).

The remaining 5% represents three creditors out of 27 with whom negotiations are currently underway, the Dubai-based company said in a stock exchange filing.

“We have already paid 42% of our Islamic deposits liabilities relating to financiers and 92% of our Islamic deposit liabilities relating to liquidity support providers,” said Amlak managing director and CEO Arif Abdulla Alharmi Albastaki.

Amlak has been restructuring its debts as its business faces a property slump, with an oversupply and weak demand in the real estate market that has resulted in a decline in its Islamic financing portfolio, drop in rental income and loss on company-owned assets.

The company said in November it had accumulated losses of 1.35 billion dirhams ($367.6 million).

It held 5.8 billion dirhams in assets at September 30, down from 5.9 billion dirhams at the end of 2018 and 6.6 billion dirhams in 2017.

The company made a net loss of 41 million dirhams for the first nine months of 2019, from 51 million dirhams for the same period in 2018. It also had to bear an impairment charge of 74 million dirhams on Islamic financing assets compared to 42 million dirhams for the same period in 2018.

In mid-December it announced a plan to tackle its accumulated losses, which included focusing on its core business of real estate finance and accelerating internally generated cashflows through exiting non-core businesses.  

Amlak in November 2014 entered into a restructuring plan with its creditors, which was subsequently amended in December 2016.

By the end of 2018 the company entered into negotiations with creditors again, as it did not have sufficient liquidity to pay off its liabilities to the agreed schedule.

Amlak said in January 2019 that it was entering into renegotiations with its financiers on restructuring terms to allow it “more flexibility in adapting to current market conditions”. At the time the company said it had paid 4.3 billion dirhams, representing 48% of its total outstanding debt, within the first four years of restructuring.

Six months later in July, Amlak said it had made “significant progress” in obtaining approvals for new terms with creditors and expected negotiations to conclude before the end of 2019.

Its creditors make up more than 50% of the banking universe in the UAE, according to the company. 

Amlak is 45% owned by Emaar Properties.

($1 = 3.6725 Emirati dirhams)

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