Dubai World has ceded control of its investment in Barneys, a luxury New York retailer, after the company underwent a major restructuring of its debts.
Istithmar World, an investment arm of Dubai World, bought Barneys for US$942.3 million (Dh3.46 billion) in 2007, but lost control of the company this week in a deal with creditors.
Barneys announced that Perry Capital, the company's largest lender, and Yucaipa Companies, an investment firm, are set to exchange their debt for equity, reducing the long-term debt burden for Barneys from $590m to $50m.
Istithmar will become a minority shareholder, alongside Yucaipa, with Perry owning the majority of the luxury retailer.
Barneys was just one of a number of investments made by Istithmar in Dubai's boom years running up until 2007.
The investment company also bought into Loehmann's, a US department store chain, which emerged from bankruptcy in March last year. It bought the luxury liner Queen Elizabeth 2 for $100m from Cunard in 2007 and took a 20 per cent stake in Cirque du Soleil, a circus and arts entertainment show.
In hospitality, Istithmar bought a 73 per cent stake in the Mandarin Oriental in New York for $340m in 2007 and the W Hotel Union Square for $285m in 2006, which was eventually sold in a foreclosure auction in December 2009 for just $2m.
Last week, Istithmar bought the 50 per cent it did not own in Atlantis The Palm hotel in Dubai for $250m from the previous co-owner, Kerzner International Holdings.
It first emerged in February that Barneys was restructuring its debts after amassing loans with unsustainable repayments. Istithmar declined to comment on the latest developments. Barneys said it had achieved double-digit same store sales growth last year and that the restructuring would benefit the brand.
"This agreement provides us with increased free cash flow that will be used to revitalise our stores, invest in Barneys.com and further enhance our customer experience at a time when our operational financial performance is very strong," said Mark Lee, the Barneys chief executive. "Our customers, vendors and employees will benefit from this significant deleveraging which will reinforce Barneys' unique position as the preeminent luxury specialty retailer."
Richard Perry, the chief executive of Perry Capital added: "Barneys New York is an extraordinary brand that will become even stronger through this transaction. We are confident that the new capital structure will provide the Barneys management team with the financial flexibility it needs to continue its already impressive performance.
rjones@thenational.ae
twitter: Follow and share our breaking business news. Follow us
iPad users can follow our twitterfeed via Flipboard - just search for Ind_Insights on the app.
Company profile
Name: Thndr
Started: October 2020
Founders: Ahmad Hammouda and Seif Amr
Based: Cairo, Egypt
Sector: FinTech
Initial investment: pre-seed of $800,000
Funding stage: series A; $20 million
Investors: Tiger Global, Beco Capital, Prosus Ventures, Y Combinator, Global Ventures, Abdul Latif Jameel, Endure Capital, 4DX Ventures, Plus VC, Rabacap and MSA Capital
The specs
Engine 60kwh FWD
Battery Rimac 120kwh Lithium Nickel Manganese Cobalt Oxide (LiNiMnCoO2) chemistry
Power 204hp Torque 360Nm
Price, base / as tested Dh174,500
More from Rashmee Roshan Lall
The Sand Castle
Director: Matty Brown
Stars: Nadine Labaki, Ziad Bakri, Zain Al Rafeea, Riman Al Rafeea
Rating: 2.5/5
Company: Instabug
Founded: 2013
Based: Egypt, Cairo
Sector: IT
Employees: 100
Stage: Series A
Investors: Flat6Labs, Accel, Y Combinator and angel investors
Wicked: For Good
Director: Jon M Chu
Starring: Ariana Grande, Cynthia Erivo, Jonathan Bailey, Jeff Goldblum, Michelle Yeoh, Ethan Slater
Rating: 4/5
Key changes
Commission caps
For life insurance products with a savings component, Peter Hodgins of Clyde & Co said different caps apply to the saving and protection elements:
• For the saving component, a cap of 4.5 per cent of the annualised premium per year (which may not exceed 90 per cent of the annualised premium over the policy term).
• On the protection component, there is a cap of 10 per cent of the annualised premium per year (which may not exceed 160 per cent of the annualised premium over the policy term).
• Indemnity commission, the amount of commission that can be advanced to a product salesperson, can be 50 per cent of the annualised premium for the first year or 50 per cent of the total commissions on the policy calculated.
• The remaining commission after deduction of the indemnity commission is paid equally over the premium payment term.
• For pure protection products, which only offer a life insurance component, the maximum commission will be 10 per cent of the annualised premium multiplied by the length of the policy in years.
Disclosure
Customers must now be provided with a full illustration of the product they are buying to ensure they understand the potential returns on savings products as well as the effects of any charges. There is also a “free-look” period of 30 days, where insurers must provide a full refund if the buyer wishes to cancel the policy.
“The illustration should provide for at least two scenarios to illustrate the performance of the product,” said Mr Hodgins. “All illustrations are required to be signed by the customer.”
Another illustration must outline surrender charges to ensure they understand the costs of exiting a fixed-term product early.
Illustrations must also be kept updatedand insurers must provide information on the top five investment funds available annually, including at least five years' performance data.
“This may be segregated based on the risk appetite of the customer (in which case, the top five funds for each segment must be provided),” said Mr Hodgins.
Product providers must also disclose the ratio of protection benefit to savings benefits. If a protection benefit ratio is less than 10 per cent "the product must carry a warning stating that it has limited or no protection benefit" Mr Hodgins added.
MATCH DETAILS
Liverpool 2
Wijnaldum (14), Oxlade-Chamberlain (52)
Genk 1
Samatta (40)
Abaya trends
The utilitarian robe held dear by Arab women is undergoing a change that reveals it as an elegant and graceful garment available in a range of colours and fabrics, while retaining its traditional appeal.
