Abdullahs aiming for sale of share in Damas stake

The biggest shareholders and previous owners of Damas International have appointed a financial adviser to sell some of their US$134 million stake in the jeweller.

Brothers Tawhid, Tawfiq and Tamjid Abdullah are willing to sell their shares in the company at a price "not less that US$0.45", Damas said in a statement. Satish Kumar / The National

The biggest shareholders and previous owners of Damas International have appointed a financial adviser to sell some of their US$134 million (Dh492.19m) stake in the jewellery company.

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Brothers Tawhid, Tawfiq and Tamjid Abdullah are willing to sell their shares in the company at a price "not less that US$0.45", Damas said in a statement on the Nasdaq Dubai exchange yesterday.

"To the extent that any material developments arise from such appointment of a financial adviser by the Abdullah brothers, the company shall keep the market updated in due course," the statement said.

Damas shares rose 15 per cent after the announcement.

The Abdullah brothers were the owners of Damas before it became a public company in 2008.

In 2010, they were the subject of a disciplinary action by the Dubai International Financial Centre for withdrawing more than Dh600m of cash and gold from Damas without shareholder approval.

The three men still owe Damas more than Dh600m and, separately, Dh1.2 billion to banks, bringing their total obligations to Dh1.8bn.

Damas shares currently trade at 0.265 US cents and would need to increase 70 per cent to reach the level at which the Abdullah brothers are willing to sell some of their stake.

"In a market like ours, where you have companies below book value, I would be surprised to find someone paying double the market price unless there are assets we do not know about," said Mohammed Ali Yasin, the chief investment officer at CAPM Investment in Abu Dhabi.

"It is just like any commercial deal. It has to make sense for the buyers and the sellers. At the end of the day, it's a buyers' market these days, and the buyers need to make their own evaluation," he said.

The jeweller is also owed hundreds of millions of dirhams from investments and loans made worldwide while the Abdullah brothers were in charge.

Damas has set up a recovery task force with the aim of recouping more than Dh337m, which represents Damas's share of proceeds from exiting foreign ventures. The three brothers are still employed by the company as advisers to help in recovering company funds they committed in handshake deals without written contracts.

Despite the problems that plagued Damas and the money still owed, its management says the business has turned a corner.

In May last year, Damas repaid Dh200m of loans to banks and completed a Dh3bn debt restructuring in which it is to repay Dh1.1bn of loans over three years and receive working capital of Dh1.9bn.

The company reported a Dh53.3m profit for the year to the end of March last year, reversing a Dh2bn loss in its previous financial year.

In its interim results in November, Damas announced that profit was six times higher than for the same period in 2010.

Net profit reached Dh26.5m between April and the end of September compared with Dh4.2m during the same six months in 2010.

The Abdullah brothers currently own 52 per cent of the issued share capital of Damas, and Fidelity Global Special Situations, an investment fund, owns 1.49 per cent, according to Bloomberg.

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