Union Properties in ‘final stages’ of debt restructuring

Company had borrowings of Dh1.8bn at the end of 2019, of which Dh1.4bn is due for repayment this year

DUBAI, UNITED ARAB EMIRATES – Mar 1: View of the residential project by  Union Properties at Motor City in Dubai. (Pawan Singh / The National) *** Local Caption ***  PS01- MOTOR CITY.jpg
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Dubai-based developer Union Properties said on Sunday that it is “in the final stages” of a comprehensive debt restructuring process.

The restructuring agreements with lenders “are expected to include various types of solutions such as tenor date extension and reduction of rates”, the company said in a statement to the Dubai Financial Market, where its shares trade.

“The move will support the company to improve its overall financial position.”

Union Properties is the master developer behind Dubai’s Motor City, Uptown Mirdiff and Green Community neighbourhoods.

At the end of 2019, the company had borrowings of Dh1.8 billion, of which about Dh1.4bn was due for repayment this year, according to a note in its filed financial statements.

The developer had also proposed a resolution to use up to Dh332.8m of its statutory reserve to write off historic losses, but this was not approved by shareholders at a general assembly earlier this month.

Union Properties said last month that one of its subsidiaries has begun arbitration proceedings in a bid to reclaim Dh1.5bn it is owed for construction work on “a significant project that was completed around 10 years ago”.

Chief executive Khalifa Al Hammadi said the company “will not spare any effort in pursuit of the collection of the amount owed, and is taking the proper legal procedures”.

The company declared a loss of Dh224.3m last year on revenue of Dh423.4m in 2019, as it crystallised a loss of Dh95m on funds and equity investments sold for Dh196.2m and a Dh12.8m loss on investment properties sold for Dh101.7m.