Dubai: The Dubai investment firm Shuaa Capital has secured a big break after reaching a deal with bondholders on a $150 million bond maturity.
Under the deal, Shuaa wins itself more time on the payback to bondholders on the $150 million bond, which was issued by an affiliated SPC (special purpose vehicle).
Shuaa has been working on a plan to 'right-size its balance-sheet' and 'bolster liquidity'. The deal with bondholders thus eases the Dubai company's path for a new capital infusion, which is expected in the 'next 12 months to drive growth'.
Under the agreement - and subject to regulatory and shareholder approval - Shuaa intends to give noteholders the option to elect to convert a certain portion of their notes into equity. Any remaining notes shall be settled in cash at a pre-agreed discount, ahead or at the revised maturity date of March 31, 2025. (The earlier maturity was for end March 2024.)
"The new terms deliver significant advantages to shareholders and noteholders," Shuaa said in a statement. "They present an opportunity for noteholders to actively participate in the company’s growth plan, while enabling an attractive equity story based on a significant reduction in liabilities, which should translate positively on the company’s financial position and performance."
Shuaa - whose shares are currently not trading on DFM - will thus shift its attention to finalising negotiations with its senior creditor ahead of the planned capital injection.
"While recent months have presented challenges, I am grateful that stakeholders could come together to chart the path for investment, growth, and prosperity for the company," said Wafik Ben Mansour, the acting Shuaa CEO.
Shuaa's next set of plans
A new management team is working to complete Shuaa's capital optimisation plan. It will submit audited FY 2023 financial statements once negotiations are finalized with 'its senior creditor'. A new share issuance is also in the works, subject to regulatory and shareholder approval.
We extend our sincere appreciation to all stakeholders for their resounding vote of confidence in Shuaa Capital, reaffirming their belief in the inherent strength and resilience of our business
The bond deal was facilitated by Houlihan Lokey and Baker Botts. According to Arun Reddy, Managing Director and Head of Middle East and Africa, Special Situations and Real Estate at Houlihan Lokey, “Houlihan Lokey is honoured to have worked with the company (Shuaa) in structuring and negotiating this transformative capital optimization.
"This agreement underscores Shuaa Capital's dedication to enhancing stakeholder outcomes and strengthening its financial position.”
