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Closing of restructuring and finalisation of the Cascade Agreement

As announced by Damas International Limited (the "Company") on 12 May 2011, the restructuring of the bank facilities of the Company has closed successfully and is now effective. The CEO of the Company, Anan Fakhreddin, commented "The Company's financial situation is now secure and we can fully focus on strengthening the Company's core operations".

One of the conditions which was required to be satisfied prior to the closing of the restructuring, and a significant milestone for the Company, was the finalisation of the cascade agreement (the "Cascade Agreement"), which will allow the Company to recover amounts owed by the Abdullah Brothers. As previously announced by the Company, the Cascade Agreement was signed on 1 May 2011 by the Company, the Abdullah Brothers (the "Abdullah Brothers"), a bank appointed as coordinating bank under the agreement (the "Coordinating Bank"), Damas Real Estate LLC ("Damas Real Estate"), Damas Investments LLC (" Damas Investments" and together with the Abdullah Brothers and Damas Real Estate, the "Abdullah Brothers Group") and a number of bank creditors of the Abdullah Brothers Group.

Cascade Agreement Report for shareholders

The Company would like to clarify that upon verification by the Company with NASDAQ Dubai of a person's shareholding in the Company, such shareholder will be provided with a summary of the terms and conditions of the Cascade Agreement which are relevant for shareholders (the "Cascade Agreement Report"). In order for the Company to verify a person's shareholding prior to release of the Cascade Agreement Report, a shareholder must provide the Company in writing within 30 days of the date of this notice with confirmation of the following details:

1. its name (i.e., the full name of the individual or entity registered with a share registry, NASDAQ Dubai CSD and/or its custodian as a shareholder of the Company);

2. its full postal correspondence address;

3. its email address and/or the email address of its principal contact person;

4. its telephone and fax numbers and/or the telephone and fax numbers of its principal contact person; and

5. its registered NASDAQ Dubai identification number (i.e., its NIN).

Contact details for the Company are set out below.

The Cascade Agreement Report will also contain details as to how shareholders may access a copy of the Cascade Agreement for review at the Company's premises, subject to appropriate redaction of certain confidential information and provided that access to such redacted version of Cascade Agreement will only be available to a shareholder following its execution of a non-disclosure agreement (in the form acceptable to the Company).

Cascade Agreement

As previously announced, the Cascade Agreement provides the legal framework for an orderly liquidation of, and realisation of cash proceeds from the sale of, the assets of the Abdullah Brothers Group during a three year period from 1 May 2011. Under the Cascade Agreement the parties have agreed to a standstill against the Abdullah Brothers Group whilst the Cascade Agreement is in place and sale proceeds of the assets of the Abdullah Brothers Group will be distributed through separate cascade accounts for the creditors of Damas Real Estate, the Abdullah Brothers and Damas Investments, respectively. Note that the shares pledged in favour of the Company under the share pledge agreement dated 31 October 2009 between the Company and the Abdullah Brothers (pursuant to which the Abdullah Brothers pledged 350 million shares in the Company in favour of the Company) are included in this sale process and proceeds from sale of these shares are distributed through the Abdullah Brothers cascade to all creditors of the Abdullah Brothers, including the Company.

The Company received financial advice from a leading international accountancy firm (the "Financial Advisor") with respect to its expected recoveries under the Cascade Agreement in relation to the net amount of AED 614 million which was agreed to be repaid by the Abdullah Brothers to the Company. In relation to the estimated recovery figures provided by the Financial Advisor, we draw your attention to the potential adjustments described below. The estimated recovery for the Company, as modelled by the Financial Advisor under the Cascade Agreement was AED 204 million (based on the positions of the creditors of the Abdullah Brothers Group as at the calculation date of 20 December 2010). The Company took into account factors such as the value of the 350 million shares in the Company pledged in favour of the Company under the share pledge agreement dated 31 October 2009 between the Company and the Abdullah Brothers, including the possible value of the pledged shares and likelihood of identifying a buyer if the restructuring of the Company's bank facilities had not been concluded (bearing in mind that the execution of the Cascade Agreement was a condition of the Company's restructuring becoming effective). Taking into account these factors and other legal and financial advice received, the Company concluded that it was in the best interests of the Company and its shareholders to enter into the Cascade Agreement.

The estimated recovery figure set out above is subject to the following potential adjustments:

(a) The estimate is based on the information provided by the Abdullah Brothers Group and its advisors and has not been subjected to any detailed due diligence.

(b) Recoveries could potentially increase to AED 266 million in the event that a successful debt restructuring for the Company occurs.

(c) Recoveries could increase if there are any recoveries from Damas Investments.

(d) The estimate does not take into account any possible sale of shares in the Company held by the Abdullah Brothers and therefore recoveries could increase if there are any recoveries from the sale of such shares.

(e) The estimate is based on the reserve price attributed to the properties available for sale as per the Cascade Agreement. The reserve price for most of the assets is based on the valuation ascribed by an independent property valuation agent as at 31 December 2009. This valuation could be subject to change both upwards and downwards.

(f) Recoveries could change based on the timing of the sale of the assets, since that has a bearing on the debt servicing charges. The estimate assumes that the rental income will be adequate to service the interest cost. If the rental income is insufficient to meet the debt servicing charges, part of the sale proceeds will have to be used to settle the unpaid interest, thereby reducing the amount recoverable by unsecured creditors.

(g) The estimate assumes payment of certain amounts towards settlement of third party guarantees, other unsecured creditors and post-dated cheques, respectively. In the event that any other personal liabilities of the Abdullah Brothers or liabilities of Damas Real Estate qualify as proven debts, this estimate will be reduced.

(h) The estimate does not reflect any sale proceeds from properties partially owned by the Abdullah Brothers. Any realisation from these assets will result in an increase in the recoveries for unsecured creditors.

The estimate assumes that the income earned by the Abdullah Brothers from the consulting agreement with the Company will continue over the period of the Cascade Agreement to offset the permissible personal expenses as per the terms of the Cascade Agreement.

Once the Cascade Agreement terminates the Company shall be able to seek to recover the balance of monies owing.

-Ends-

Contact Details
Damas International Limited
Address: Jumeirah Lake Towers, DMCC, Damas Building, PO Box 1522, Dubai
Fax: +971 4 427 0399
Attention: Jirayr Habibian
Reference: Cascade Agreement
Email: cascaderequests@damasjewellery.com

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NASDAQ Dubai is not responsible for the content of issuer disclosures.

© Press Release 2011