Creditors of Dubai firm Amlak Finance are considering a restructuring proposal from the indebted mortgage lender, the United Arab Emirates’ economy minister said on Thursday, adding he expected it would reach a debt solution.
Amlak, a victim of the bursting of Dubai’s real estate bubble in 2008, is still without a solution that would see its business revived more than four years after its shares were suspended.
It has been in talks with a six-member creditor committee, which includes two government-owned funds as well as Dubai’s largest lender and its biggest Islamic bank, to address AED7bn (US$1.9bn) debt, sources told Reuters earlier this week.
“We need to wait for some decisions. We are now negotiating with them [creditors] and they have to take it (our proposals) to their boards,” UAE economy minister Sultan bin Saeed al-Mansouri told reporters.
“The company is back to profitability and is performing well and we believe it will get out of its debt problem.”
Amlak shares were suspended in November 2008 as the company was hit by the seizure of global credit markets and start of a real estate slump which would see prices fall more than 50 percent from their peak.
Helped by an economic revival in trade and tourism over the past year and its status as a safe haven in the politically turbulent Middle East, real estate prices have shown signs of recovery and new projects are being announced.
While the sector’s health is improving and participants are keen to secure a solution, Amlak’s situation is said to be complex and a previous attempts to resurrect the firm have not yielded success.
The Dubai government is reported to be in a difficult position because while it wants to avoid causing equity holders significant pain, at the same time it is owed cash directly and indirectly.