|02 April, 2020

Coronavirus: DXB Entertainments extends temporary suspension of its theme park operations

The company reached a deal to delay interest payments on a $1.1bln loan

Image for illustrative purposes. Dubai theme park.

Image for illustrative purposes. Dubai theme park.

DXB Entertainments (DXBE), the operator behind Dubai Parks and Resorts, said on Thursday that it has extended the temporary suspension of its theme park operations, and also reached a deal with creditors to delay interest payments on a 4.2-billion dirham ($1.1 billion) syndicated loan.

"The health and safety of our employees, guests and their families is our top priority, and accordingly and in support of both local and global efforts to reduce the spread of Covid-19, we have taken the decision to extend the temporary suspension of operations at our destination," Mohamed Almulla, Managing Director and CEO, DXB Entertainments said in a statement.

The temporary suspension of theme park operations at Dubai Parks and Resorts "will be extended from 31 March 2020 until such time the situation is re-evaluated," the statement said.

The decision also includes the suspension of operations at Lapita Hotel as well as retail and dining destination Riverland Dubai.

The theme park operator will also delay the opening of the Legoland Hotel from June 2020 to the fourth quarter 2020 due to the current uncertainty and potential reduction in demand for the remainder of the year, according to the statement.

In the forthcoming period, which incorporates the holy month of Ramadan and historically experiences lower demand, the company will take the opportunity to undertake its annual routine maintenance cycle, in readiness for re-opening.

The rapid spread of Covid-19, which has infected more than 900,000 people worldwide, has pushed many companies around the world to temporarily shut down operations, as governments urge residents to stay indoors or observe social distancing.

Almulla said the coronavirus outbreak would have a material impact on DXB Entertainments' 2020 results, but given the high level of uncertainty, it is too early to quantify this impact.

"Our contingency plans have been activated, and as of today, we have either implemented or are in the process of implementing further cost savings, in addition to the material savings already delivered in 2019," Almulla said.

The company had implemented a cost efficiency and optimisation plan in 2019, delivering year-on-year savings of 172 million dirhams ($46.83 million) and expects further savings in 2020, due to the annualised impact.

Agreement with creditors

DXBE has also reached a deal with banks to defer a significant proportion of the interest on the 4.2 billion dirham syndicated loan facility over the next 15 months.

The theme park operator had announced back in February that it is in advanced discussions with syndicated loan financiers and other financial institutions regarding the loan.

"These discussions have now concluded and effective from 31 March 2020, for a period of 15 months through to 30 June 2021, a significant proportion of the interest/profit due will be deferred and will be settled in cash at the end of the 15-month period," the statement said.

"Concurrently, the number of financing partners in the financing syndicate has been reduced, and we are grateful to the remaining partners for their support and look forward to working closely with them in the future. The facility is now entirely denominated in dirhams," it added.

(Writing by Gerard Aoun; editing by Anoop Menon)

( gerard.aoun@refinitiv.com )

#DXBEntertainments #Dubai #COVID 19 #Loans

Disclaimer: This article is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Read our full disclaimer policy here.

© ZAWYA 2020

More From Business