Dubai property fund Emirates REIT bond proposal yet to win a majority, says opposing group

No clear winner so far – Both Emirates REIT and the Ad Hoc Group representing major bondholders in the 2017 $400 million Sukuk laid claim to a majority. Image Credit: Supplied

Dubai: So, who won? 

The operator of Emirates REIT says it has a sizeable number of bondholders siding with its proposal to extend the maturity period of its $400 million Sukuk from 2017.On Thursday, Equitativa, the fund manager, said 75 per cent of those who cast early votes on the proposal sided with the move.

But the ‘Ad Hoc Group’ – comprising bondholders who opposed the maturity period extension – dispute this contention. “The existing Ad-Hoc Group represents over 30 per cent of large Sukuk holders and clearly represents the majority who are against the transaction and consider that the deal should be enhanced,” it said in a statement.

On Equitativa’s contention, the Group said: “The company announced that 60 per cent of the certificate-holders cast their vote before the early document review fee deadline, with 75 per cent of those votes in favour of the consent solicitation.

What’s the fight about

Equitativa wants to extend the 2017 Sukuk’s maturity date by issuing new certificates with a further two-year period. In return, the fund manager of Emirates REIT says it will change the state of the current ‘unsecured’ Sukuk certificates to ‘secured’ in the new one. And that the profit terms will remain the same.

“The conclusion is that the majority of Certificate-holders representing 55 per cent remain opposed or have not voted, demonstrating the overwhelming concerns that certificate-holders have with the proposal presented. With that backdrop, the early vote results appear far from encouraging and validate the Ad-Hoc Group’s view that the majority of the certificate-holders remain unsupportive of the proposal as of the early participation deadline.”

Equitative had set May 26 evening as the deadline for the early submissions. June 7 is the final date.

What bondholders want

The Ad Hoc Group investors vehemently oppose the new Sukuk certificate plans. In the statement issued Thursday, they call for…

* Transparency on (i) the operational, financial and liquidity position of the company; (ii) All ongoing breaches to transaction documents; (iii) ongoing litigation; (iv) regulatory investigations; and (v) related party transactions.

* Cessation of cash leakages via excessive management fees, operating costs and capex.

* Rectification of legacy governance issues at the company.

* Adequate downside protection for the certificate-holders, particularly in respect to security.

* Adequate economics for the material risks that the certificate-holders bear.