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Amlak loans 'recoverable': Emaar

Government committee still working on merger options
The government committee for Amlak Finance is continuing to explore possibilities of a merger and balance sheet restructuring, Emaar Properties said yesterday.

"The government committee for Amlak affairs continues to explore the possibilities of a merger and balance sheet restructuring. This has entailed a full review and assessment of Amlak 's business operations, liquidity position and providing guidance to its management and regulators where necessary with a view to making recommendations to the UAE government on Amlak 's long term stability, liquidity, assets and liabilities management requirements," the developer said yesterday in its reviewed earnings statement posted on the Dubai Financial Market ( DFM ).

Emaar , which holds 48 per cent stake in Amlak , said loans due from the Islamic mortgage company were "fully recoverable".

As per the DFM posting, Emaar 's loan to Amlak amounted to Dh772.6 million at the end of September, which includes Dh533.7 million relating to a credit facility. The company received Dh146 million during the period.

In September, the developer, in a prospectus for its $500 million convertible bond issue, said Amlak may need to restructure its debt obligations which would expose Emaar to "loan write offs and a decrease in the value of its investment."

" Amlak ... may need to restructure its debt obligations which may expose the guarantor to loan write offs and a decrease in the value of its investment. Should Amlak 's financial condition worsen or fail to improve, ( Emaar ) may be required to make provisions in its financial statements for potential losses arising under the inter-company loans," the developed had said.

Trading in Amlak shares also have been suspended until the government committee finalises its recommendations.

Amlak reported its first quarterly profit this year as it set aside less money tocover bad loans. Net income was Dh 5.99 million in the third quarter, compared with a Dh44.6 million loss a year earlier. Impairment charges for Islamic loans and investments in the period declined to Dh17.7 million from Dh44 million.

In September, Dubai Islamic Bank raised its stake in Tamweel to 57 per cent from 21 per cent to help boost lending. The government was earlier working on mergingthe two Islamic mortgage lenders in Dubai.

Media reports thereafter suggested that Emirates Islamic Bank (EIB) and Dubai Bank were in merger talks with the former likely to acquire Amlak Finance . However, Emirates NBD, the parent company of EIB, has rubbished the talks of merger.

According to Emaar statement, trade receivables at the end of September amounted to Dh1 billion compared with Dh981.4 million at the end of last year, according to the statement. Trade receivables within the next 12 months totaled Dh802.3 million.

Parag Deulgaonkar

© Emirates 24|7 2010