Dubai: Dubai Parks and Resorts’ Dh1.68 billion rights issue, for which the subscription opens May 12, has already got “committed investors” who have agreed to subscribe to more than 80 per cent of the shares meant for the public.
The proceeds from the issue (at Dh1 a share) will be used by the developer for a Dh2.6 billion Six Flags resort and theme park project in Jebel Ali.
Following the completion of the process, Dubai Parks’ share capital will go up to Dh7.99 billion.
On whether the company will look outside of the region for “committed investors”, Raed Al Nuaimi, CEO, said: “Regional investors who have committed to come on board are more than sufficient for us to see the rights issue through. In my opinion, the issue pricing is attractive since it’s being offered on par.”
On fast-tracking the issue launch, the CEO said: “As soon as we had the shareholders’ approval on Monday, we wanted to do it at the earliest and complete before Ramadan, which is usually a quiet period.”
Shareholders on the company’s register and on DFM at the close of business May 2 will be allocated 1 ‘right” for every 3.767 shares they hold.
The Dubai Parks’ parent company, Meraas Holding, will still be the major shareholder with 60 per cent.
Trading in the rights on DFM will commence May 4 and the last day of trading is May 18. The actual subscription for the additional shares start May 12 and closes on May 25.
During the subscription period, rights holders (both shareholders and any persons who purchased the rights during the trading period) will be allowed to use the rights to subscribe for the new shares at the issue price.
It will be interesting to note the depth of retail investor interest in the upcoming issue. Trading activity on DFM remains extremely fluid and the size of the offer from Dubai Parks could go a long way in mopping up available investor funds out in the market.
On the Six Flags project itself, Al Nuaimi said: “We have done a good concept design and should start with the construction by late this year or early next. That should put us on track for a [fourth-quarter] opening.”
The Six Flags project represents the next big step that will be taken by Dubai parks, currently in the home stretch of its maiden project that is due to open mid-October. The developer has already secured the debt portion, of Dh993 million, for Six Flags from a consortium of Abu Dhabi Commercial Bank, Dubai Islamic Bank and Sharjah Islamic Bank.
“We are well positioned to benefit from two things: firstly, we’re based in Dubai, which is the world’s fourth favourite travel destination, and we will be the first integrated theme park destination in Dubai,” said Al Nuaimi. “Secondly, Dubai’s infrastructure — the expansion of Dubai International Airport and the Metro line — as well as easier visa regulations will encourage more visitors to come to the UAE.
“There is a significant gap in the regional market and the Indian sub-continent for theme park destinations and Dubai Parks and Resorts is uniquely positioned to benefit from this.”
• The Six Flags Dubai project, which will cost Dh2.6 billion, is to have 27 rides and attractions. Apart from the Dh1.68 billion coming via the rights issue, Dubai Parks has secured Dh993 million from a consortium of lenders.
• The remaining AED 65 million that is being raised will be used to cover new business development expenses and costs associated with issuing the new shares.
• Arqaam Capital Ltd. and Emirates Financial Services PSC are joint book-runners and joint lead managers for the issue. Emirates NBD Bank is the sole receiving bank.
• Meraas, the majority shareholder in Dubaai Parks, has an agreement with certain “committed investors” to acquire a portion of Meraas’ rights, in addition to the more than 80 per cent of the public shares if they are not subscribed.