Meraas Leisure and Entertainment on Sunday announced plans to undertake a capital restructuring of indebted theme parks operator DXB Entertainments in a move that would also lead to it taking the company private.
The company, which along with its parent Meraas Holding, owns a 52.29 per cent stake in the operator of the Dubai Parks and Resorts theme parks, is planning to convert most of the company's outstanding debt into newly-issued shares, which will increase the size of its holding to 93.92 per cent. It will also launch a tender offer to buy out remaining stakeholders.
“The proposed transaction intends to provide DXBE with a sustainable capital structure, by reducing debt, amidst a challenging market environment,” Meraas, the majority shareholder of DXB Entertainments, said.
Under the terms of the proposed offer, DXBE’s shareholders will be entitled to receive Dh0.08 in cash for each share held through participation in a tender offer which, subject to certain conditions, is expected to be launched in January 2021.
Dubai Parks and Resorts first opened in October 2016. It features a Legoland Dubai, Bollywood Parks Dubai and a Motiongate theme park. However, visitor numbers have been below forecasts and a proposed expansion to add a Six Flags Dubai theme park was shelved last year. The company has undertaken a reorganisation of park assets and a cost-cutting exercise, but has continued to lose money. A loss of Dh1.06bn for the first nine months of this year brought accumulated losses to more than Dh6.2bn as of September 30.
The proposed restructuring will see an existing convertible bond instrument of Dh1.48bn owed to Meraas and Meraas Holding being converted into new shares in DXBE at a conversion price of Dh1.04 per share, according to Meraas.
Meraas will also take on Dh4.26bn of senior debt owed by DXB Entertainments in return for new shares.
In total, 8 billion new shares will be issued, bringing the total to 62.8bn, which will increase Meraas and Meeras Holding's stake to 93.92 per cent. It then plans to buy the remaining shares from minority shareholders for Dh0.08 per share.
“In providing a viable solution to secure the company’s future, Meraas’ proposed offer also aims to protect the interests of other stakeholders, including employees, operating partners, suppliers, and customers,” the company said.
Earlier this year, DXB Entertainments reached an agreement with banks to defer a "significant proportion" of the interest on a Dh4.2bn syndicated loan to improve the company's liquidity amid disruptions to operations as a result of the coronavirus pandemic.
DXB Entertainments will appoint an independent valuer to determine if the offer from Meraas is fair. If the report indicates a valuation higher than Dh0.08 per share, Meraas has the right not to proceed with its offer, the company said.
DXB Entertainments said in a separate statement it is evaluating the offer and will update the market in due course.
