Dubai-based Shuaa Capital reaches 'amicable' deal with major creditor

Dubai: The Dubai investment firm Shuaa Capital has gotten itself a big break after reaching an ‘amicable’ deal with one of its bigger creditors. This, the DFM-listed company said, will show up positively in its profit and loss numbers, through generating Dh36.9 million in non-cash profit.

Shuaa is putting together a major turnaround plan after turning in a set of indifferent results. The deal with the creditor thus frees up more resources and time for the company, which at its peak had deep exposures in real estate, tech investments, etc.

On the new deal, Shuaa said: “This resolution represents a critical milestone in the company’s ongoing capital optimization strategy - a comprehensive initiative aimed at bolstering its financial foundation and ensuring sustainable growth.” (The name of the major creditor was not revealed.)

Shuaa needs to deal with Dh1.13 billion in accumulated losses, which represent 44.47% as a ratio to its capital.

The recently recast Shuaa management has been involved in a series of steps, which are starting to bear results. It announced plans to issue 'mandatory convertible bonds', with Dh85 million for new investors and Dh274.5 million meant for existing noteholders.

It was in this regard that an issue cropped up earlier this month, with ADX-listed Eshraq Investments making its stance clear on the Shuaa MCB plans.

‘Eshraq explicitly denies that it has prosed, agreed or executed any subscription agreement relating to Shuaa’s MCB,” said the company.

“As of the date of Shuaa’s disclosure, Esshraq has only recently received the proposed subscription agreement from Shuaa, which remains under active review and assessment.”

"The 'management has devised a 5-year plan to revamp the business for growth and value creation via the launch of new investment funds and re-activating the investment banking platform via deal sourcing and securing new mandates," said a Shuaa statement.

"In addition, the company expects a lean operating structure should contribute to cost efficiencies permeating through the bottom-line."

March 31, 2025 is a key dateline in the Shuaa restructuring plans.

The company had secured an agreement with noteholders to amend the terms of $150 million bonds issued by an affiliated special purpose vehicle.

"The agreement offers bondholders the opportunity to convert a portion of their bonds into equity through the MCBs," said the Shuaa statement. "Subsequently, any outstanding (non-converting) bonds will be settled at a discount in cash, on or before March 31."