Dubai: The gloves are off in a dispute between Shuaa Capital and Dubai Banking Group (DBG) - a unit of Dubai Holding - over a Dh1.5 billion convertible bond issued to Shuaa by DBG in 2007.
The bond was meant to be converted into 250 million shares on maturity, but the two companies have been quarrelling over whether the conversion into shares is mandatory or not.
Shuaa contends that it is and yesterday asked the Dubai Financial Market to register 250 million shares, which would make DBG a 32 per cent shareholder.
Shuaa Capital's share price yesterday was Dh1.81, making the 250-million share offer worth Dh452.5 million for DBG. In response, DBG on Tuesday rejected the share offer and has asked the Dubai Financial Market to withhold registering them.
"We are writing to let you know we will not accept delivery of the conversion shares issued by Shuaa Capital & and request you not to effect registration of any shares in Shuaa Capital in the name of Dubai Banking Group without our express consent," a statement from DBG signed by Ahmad Bin Byat, chief executive of Dubai Holding, to the Dubai Financial Market said.
Dubai Banking Group has also asked Shuaa Capital to return the principal amount of the initial note as well as repay related costs and interest.
The Dubai Financial Market (DFM) yesterday issued a statement saying that it would not register the shares in the name of DBG until it had received a letter from both jointly or "an order from the concerned authorities requesting us to have the shares registered in the name of Dubai Banking Group."
Later in the day, the Securities and Commodities Authority (Esca) said that the shares could not be registered by the Dubai Financial Market without the agreement of both Shuaa Capital and the Dubai Banking Group as well as the approval of the authority.