Damas to undergo restructuring after suffering Dh714.9m loss
Will close some of firm's 450 stores and relocate others
Abu Dhabi : Damas International, the Middle East's largest jeweller by number of stores, said late Wednesday it will undergo restructuring to stay in business after reporting a Dh714.9 million loss for the six months ending September.
The restructuring will involve closing some of the company's 450 stores and relocating others to cut costs, a source close to the company said. The evaluation process is expected to last six months, he added.
"The overall strategy is to re-focus the business back to its original core strengths, which are its gold and diamond jewellery retail business operating in its key markets in the Middle East and the subcontinent," said the source.
In its statement, the company said it is negotiating with its creditors to avoid defaulting on its debt obligations and could sell certain diamond inventory in the future at a loss.
"Additional funding is required to ensure the company can continue its operations and meet its financial obligations as they fall due," the company said in its statement.
Damas's shares, listed on Nasdaq Dubai have lost nearly 80 per cent of their value since the beginning of the year and have dropped more than 40 per cent just in the past month. The firm's stock closed down five per cent yesterday at $0.152 (Dh0.56) per share.
Damas has gone through turbulent times recently with the rise in the price of gold as a result of the global recession. It has also seen several of its investments go sour.
"These results take full account of non-recurring items so the business is able to trade more capital efficiently," said the Damas source. "A business restructuring plan is in place, spearhead by an experienced restructuring expert."
The Damas board appointed CEO Hesham Ashur in mid-October after former CEO Tawhid Abdullah and his two brothers, who collectively own a majority stake in the company, were accused of making "unauthorised transactions" totalling $165 million. The brothers have since signed an agreement to repay the company in 18 months, according to Damas' statement.
