(Corrects date in second paragraph of story first published Jan. 10.)
Jan. 10 (Bloomberg) -- Qatar’s Mannai Corp. is considering a cash bid for Damas International Ltd., the Dubai jewelry retailer that was forced to restructure its board and debt after unauthorized trading by its founders. Damas shares surged.
Mannai, a retailer of consumer goods and automobiles, secured commitments on 58.79 percent of Damas shares, the Doha-based company said in a statement today. The Abdullah brothers, the founders of Damas, and other shareholders agreed “to accept that offer at a price of $0.45 per Damas share, provided that an announcement of a firm intention to make the offer is made on or prior to April 30, 2012,” it said.
Damas was fined as much as 2.57 million dirhams ($699,700) in 2010 by the Dubai Financial Services Authority and its board was asked to resign after an inquiry found the Abdullah brothers withdrew funds without board approval and owed the company 614 million dirhams. The withdrawals triggered a liquidity crunch at the company and a default on loan repayments, which pushed it to negotiate debt restructuring.
The company reached an agreement with a bank steering committee last year, which involved extending the maturities on about 3 billion dirhams of loans. Damas said Nov. 27 six-month profit attributable to shareholders rose to 24.7 million dirhams from 992,000 dirhams a year earlier.
Mannai said it may make the bid for Damas with one or more investors, without identifying them. “There can be no guarantee that any offer will ultimately be made for Damas nor as to the terms on which any offer might be made,” it said.
The Abdullah brothers appointed a financial adviser to sell some of their stake in the company for no less than 45 cents a share, Damas said last week.
Damas shares soared 133 percent the past month to 35 cents today, the highest since October 2009. An offer of 45 cents a share will value the company at $445 million.
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