Amlak Finance PJSC, the Islamic mortgage company part-owned by Emaar Properties PJSC (EMAAR), is in talks with creditors to restructure about $2 billion of bank and government debt, two bankers familiar with the matter said.
The company is negotiating with a committee of five banks representing creditors, said the people, declining to be identified because the matter is private. PricewaterhouseCoopers LLP is advising Amlak on the talks, according to the people.
Shares of Amlak and Tamweel PJSC (TAMWEEL), another Dubai-based Islamic mortgage company, were suspended in November 2008 after the seizure of global credit markets blocked their access to funds. Amlak had a third-quarter loss of 40 million dirhams ($11 million) in 2011, the last time the lender disclosed financial results, according to filings on the Dubai Financial Market.
Emirates NBD PJSC (EMIRATES), the United Arab Emirates’ largest bank by assets, is chairing the coordinating committee, the people said. Standard Chartered Plc, National Bank of Abu Dhabi PJSC (NBAD) and Dubai Islamic Bank PJSC (DIB) are also taking part, they said.
Negotiations between Amlak and its financiers are still in progress through a joint committee, the company said today in a statement on the Dubai Financial Market Web site, without giving any further information.
Government plans to merge Amlak and Tamweel were abandoned after Dubai Islamic Bank PJSC increased its stake in Tamweel to 58 percent. Dubai Islamic offered to take over Tamweel on Jan. 3 through a share swap, four days after the United Arab Emirates’ central bank issued guidelines restricting home loans.
Amlak’s liabilities were reduced by 4 billion dirhams ($1.1 billion) last March after it sold land and reached agreements with some creditors. A government committee restructuring Amlak decided not to liquidate the company to protect the rights of shareholders, U.A.E.’s Economy Minister Sultan Bin Saeed al- Mansouri was cited as saying in a statement on the ministry’s website at the time. It will some take time for Amlak shares to resume trading, according to the statement.
Amlak and Tamweel were the two biggest mortgage providers in Dubai during a real-estate boom that began in 2002 when the government allowed foreigners to buy properties in some parts of the emirate. Speculators fled after the credit crisis and Amlak and banks curtailed mortgage lending, sparking a 65 percent drop in property prices.
Amlak is 48.1 percent owned by Emaar, the U.A.E.’s biggest real-estate developer by market value, and its businesses comply with Islamic banking rules. Since 2008, a government committee had been working on a plan to revive Amlak.
Spokesmen for Emirates NBD and Standard Chartered declined to comment. A spokesman for Dubai Islamic Bank couldn’t immediately comment, while a spokesman for National Bank of Abu Dhabi declined to comment. Calls to PricewaterhouseCoopers in Dubai weren’t immediately returned.