DXB Entertainments' theme parks had a rough ride last year. The company also has sizable debts to contend with. Image Credit: Virendra Saklani/Gulf News Archive

Dubai: Shareholders in DXB Entertainments, Dubai’s mega theme parks operator, will have some tough choices to make by tomorrow.

They have until 06:00pm Tuesday (March 9) to decide whether they are willing to accept the offer from Meraas, the Dubai Government owned investment and development company. DXB Entertainments has called for a virtual general assembly on Tuesday to take up the voting. (In early trades on Monday, the DXBE stock was up 1.33 per cent to Dh0.076.)

If they don’t, shareholders in DXBE will have to consider the possibility that:

• Given imminent debt obligations which the company (DXBE) will likely not be able to service, the senior debt lenders may seek to enforce their security over the assets of the company;

• In accordance with Article 302 of UAE Commercial Companies Law, any interested party - including creditors - may seek to apply for the liquidation of Company;

• The regulator may consider options in the interests of the markets and safeguarding the creditors and shareholders;

• Claims may be filed against the Company in court for recovery of outstanding balances by interested parties; and

• Creditors may seek to pursue an insolvent liquidation of the Company.

Meraas' offer
The plan is for Meraas to take on the DXBE debt - Dh4 billion plus- and convert it into new DXBE shares. This will raise Meraas' stake to just over 90 per cent. It will then offer to buy out other shareholders at eight fils for each DXB Entertainments share.

On Monday morning, the stock was at Dh0.076.

Acquire and delist

Meraas made the pre-emptive move on the theme parks operator – in which it already holds a majority stake – after DXBE suffered losses widened due to the shutdowns following COVID-19. Taking DXBE private was seen as the best option under the circumstances.

If shareholders give the approval on Tuesday, it will accelerate the process towards DXBE’s delisting from Dubai Financial Market. Meraas will own 100 per cent of the enterprise.

In February, the Board of Directors at DXBE gave the go ahead for the acquisition.

Shareholders have been told that "If you do not accept this Offer and the transaction conditions are satisfied, including the approval by Company shareholders at the general assembly, Meraas intends to exercise its rights to mandatorily acquire your shares during Q2-2021.

"It is not mandatory to accept Meraas’ offer. Shareholders have the right to accept or reject. Before accepting or rejecting, it is important that you understand the consequences of accepting or rejecting the offer."

Volatile sessions
The Dubai stock exchange main index slipped 0.92% on Sunday in a thin trade, ending the session at 2,545.64 points. It was dragged down by Emaar, which closed 0.82% and its subsidiary, Emaar Malls, by 1.69%.

"This correction is in line with the closing of last week after six days in a row rally," said Michael Stark, Research Analyst at Exness.

"Financial services led by Emirates NBD, down 2.70%, and Dubai Islamic Bank (by 0.63%) weighed significantly on the general index. Upward movers such as Aramex (2.34%) and Emaar Development (1.82%) couldn’t do much to keep the index in green territory.

"We expect high volatility in Monday session affected by financial results disclosure and dividend distribution announcements."