Dubai: Union Properties said that some of its asset disposals from last year had to be gone through – because the developer was negotiating some vital debt restructuring plans to financially secure the company.
“Inferior assets” were disposed off to “provide liquidity”, the developer said, which fetched Dh161 million and helped stabilise the cashflow. This helped with the to the repayment of “approximately Dh175 million, which constitutes 12 per cent of loans [and] which led to the management’s success in reducing financing expenses during 2020 by approximately 31 per cent.”
Union Properties’ response comes after it was confirmed that the country’s top regulator was looking into some of the past deals, in particular as to whether some of the disposals were done at a discount to their actual value. And whether by doing so whether anyone in the company benefitted.
On the debt deal that was struck on August 20 last year, UP said: “Among the conditions of the restructuring was the commitment of Union Properties to pay a number of cash installments in accordance with the agreed dates. Since it is known that the financial restructuring or debts of any company includes a review of its assets so that inferior assets are disposed of or ways to provide liquidity.”
The last 48 hours have been quite action-packed for Union Properties. First, there was the announcement that total claims owed by a contractor to the developer was Dh3.5 billion; then came the news about the federal enquiry; and now Union Properties has issued its version.
Tomorrow, it will have a general assembly where one of the motions is whether the existing Board of Directors should be removed in total. This was brought about by a section of shareholders making such a demand.
Helped with stability
The asset sales led to "new opportunities" that then contributed to the launch of new projects, which "restored confidence in the quality of the company’s business". The reference is to the 'Motor City Hills' and 'Motor City Views' projects. "This was despite the fact that the global economy has not fully recovered from the spread of pandemic", and that the company "obtains evaluations from competent valuators before disposing of any asset and after following the legal procedures".