Amlak Finance receives approval from 95% of creditors for debt restructuring

Dubai home loans company is confident of gaining approvals from remaining creditors

Amlak Finance receives 95 per cent approval on its debt restructuring terms from creditors. Sammy Dallal / The National

Amlak Finance, a Sharia-compliant home financier in Dubai, received approval for its debt restructuring terms from creditors holding 95 per cent of its liabilities and remains in negotiation with the remainder to complete the process.

The company is engaged in discussions with three creditors out of 27 to gain 100 per cent agreement to complete the process, Amlak Finance said on Wednesday in a statement to the Dubai Financial Market, where its shares trade.

“Reaching the 95 per cent approval rate was challenging and pushed us to create innovative solutions to satisfy the different type of creditors we are dealing with,” said Arif Albastaki, managing director and chief executive of Amlak.

He said he was confident of receiving approvals from the remaining creditors, adding that a resolution would be in the interests of Amlak and all other parties involved.

“We have already paid 42 per cent of our Islamic deposits liabilities relating to financiers and 92 per cent of our Islamic deposit liabilities relating to liquidity support providers,” Mr Albastaki said, without specifying the amount of debt being restructured.

Amlak, which is 45 per cent owned by Dubai's biggest listed developer, Emaar Properties, is asking creditors to reschedule repayments on $1.2bn (Dh4.4bn) of loans over the originally-agreed period that ends in 2026, Bloomberg said in a July 2019 report.

Amlak and a number of other banks with exposure to the home financing market suffered after the 2008 property market crash when prices more than halved in some areas. Defaults on mortgages forced financial institutions to book losses and made it difficult for them to raise fresh funding to continue lending.

The property market rebounded in late 2011 and continued a strong upward trajectory until 2014, when a three-year slump in oil prices slowed the pace of economic growth and weakened demand among property buyers.

Amlak Finance had previously restructured its Dh10.2 billion investment deposits and settled Dh2.8bn in cash with financiers in 2014. It also made advance payments to financiers of Dh758 million in 2015 and resumed trading in June the same year. It subsequently paid additional Dh274m to financiers in 2016, Dh100m in 2017 and Dh684m in 2018.

The company reported a net loss of Dh41m for the first nine months of last year due to high impairment charges as well as drop in fee income and rental income. However, Amlak's total revenue for the first nine months of 2019 reached Dh263m, an increase of 11 per cent on the same period in 2018.

Amlak's total assets stood at Dh6bn at the end of September last year, with its total liabilities at Dh5bn, similar to its 2018 year-end financial position.

After the quarter ended on October 1, the company said it was awarded Dh780m in a case that had been administered by the Dubai International Arbitration Centre since 2013. It did not name the other party involved.