Marka looks to raise cash for acquisitions through bonds

The retailer said that its board had approved a resolution to issue up to Dh250 million of convertible bonds, which it plans to offer to existing shareholders.

Marka plans a Dh250 million bond sale as the listed Dubai retailer looks to raise money for further acquisitions.

In a filing to the Dubai bourse yesterday, the retailer said that its board had approved a resolution to issue up to Dh250m of convertible bonds, which it plans to offer to existing shareholders.

The announcement came as Marka reported a loss of Dh56.9m for the period from June 2014 to last December, following a buying spree in which the greenfield company snapped up Retailcorp, a unit of Istithmar World; a majority stake in Cheeky Monkeys, a children’s entertainment group; the restaurant chain Reem Al Baw­adi; and the sports memorabilia company Icons.

Set up by a group of UAE businessmen in 2014, it aims to invest in shops and restaurants in the UAE and across the GCC.

In its first full set of accounts published on the DFM yesterday, Marka, which listed on the index in September 2014, reported that its revenue from the period stood at Dh214.8m.

Marka said that it had made revenue of Dh130.5m from the sale of merchandise and an­other Dh84.3m from food and beverage sales.

However, the company spent Dh104.8m on selling its goods plus another Dh105m on gen­eral and administrative ex­penses including Dh43m in staff costs, Dh13.5m on acquisition costs and Dh7m on rent.

Other key openings have included a Champions League restaurant in Abu Dhabi’s Yas Mall and a Harper’s Bazaar Cafe due to open soon in Dubai Design District.

The latest loss comes after Marka reported a Dh8.37m 2015 first-quarter loss, a Dh2.14m loss in the second quarter and a Dh14.7m loss in the third quarter.

Last year Marka said that it expected to become profitable in 2016 after making an initial loss because of start-up costs. It also said that it expected to continue its buying spree this year.

Since Marka’s IPO in 2014, the climate in the UAE for shops and restaurants has deteriorated as consumers suffer the fallout from low oil prices and global economic slowdowns.

The hospitality development company Gates Hospitality warned last month that up to 20 per cent of cafes and restaurants in the UAE could close by the end of next year as more and more outlets fall foul of stiff competition and a tough economic climate.

“I believe in the market and I am investing with the correct concepts in the correct locations, but it is a bubble, with investors looking to join the party without doing their due diligence,” said the Gates chief executive Naim Maadad. “It’s a bubble with positives, because there are still opportunities in the market as operators find themselves in the wrong location with the wrong concept for the demographic.”

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