Shareholders of Deyaar Development approved the company's plan to restructure its capital, a move that will help it write off its accumulated losses and boost finances.
The company also secured an approval from UAE's Securities and Commodities Authority to reduce its capital from Dh5.78 billion to Dh4.55bn, Deyaar said in a statement to Dubai Financial Market, where its shares trade.
“The plan for capital restructuring proposed by our board of directors will enable Deyaar to write off all accumulated losses stemming largely from more than a decade ago, enabling us to further improve financial ratios and increasing our company’s attractiveness to investors and future financing,” Saeed Al Qatami, chief executive of Deyaar, said.
“We anticipate this to also have a positive impact on share price and demand, as well as the possibility of dividends distribution in case of accumulated profits and depending on the availability of excess cash.”
The capital restructuring plan will also see the cancellation of 21.3 per cent of the company’s shares, a move that will be completed in accordance with the Commercial Companies Law, the Company’s Article of Association, the rules and regulations of the SCA and all of the authorities’ related regulations, it said.
Shareholders authorised Deyaar’s chief executive or any members of the board of directors to undertake the necessary procedures to allow the company to complete its capital restructuring.
“The effective date of the reduction will be announced after the creditors' announcement, which will take 30 days according to the regulations and upon completing the formalities,” Deyaar said.
The developer expects the market to reflect the capital restructuring process by the end of May.
In February, Deyaar reported a 49 per cent slide in full-year profit for 2019 due to a decline in revenue and higher expenses.
Net profit attributable to the owners of the company for the period ending December 31 dropped to Dh71.5 million and revenue fell 6.21 per cent to Dh603.7m. Expenses, on the other hand, rose 10.34 per cent to Dh163.4m.
Impairments against trade receivables and other financial assets widened almost 83 per cent to Dh8.3m in the year.
Established in 2002, Deyaar - in which Dubai Islamic Bank holds a majority stake - has developed a number of projects in Dubai including in Business Bay, Dubai Marina, Al Barsha and Jumeirah Lake Tower, among others.