Deyaar's making headway with the Midtown master-development in Dubai. The developer recorded losses of Dh200 million plus in 2020, with the pandemic impacting sales. Image Credit: Supplied

Dubai: The Dubai developer Deyaar will not be pursuing a capital reduction – a proposal it had mooted after clocking accumulated losses of Dh1.53 billion at the end of 2019.

Shareholders have now sided with the board of directors’ suggestion that a capital reduction will not be needed after all. The developer, which is adding new phases to its Midtown Dubai development, has not given any reasons so far for the change.

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Capital reduction has been a strategy that listed companies in the UAE have deployed to take on losses in their books. Last year, Gulf Pharmaceutical Industries (or Julphar as it’s more known as) went through the process as part of a wider capital restructure. The Dh503 million capital cut was followed by a Dh500 million rights issue.

It was in February 2020 that Deyaar suggested a capital cut, after accumulated losses crossed Dh1.5 billion. For 2020, the developer slipped into losses, of Dh216.9 million, after taking impairment charges.

"Companies usually seek it for ease of business and cleaner records - the accumulated loss situation does not get solved," said Vijay Valecha, Chief Investment Officer at Century Financial.