Dubai Group forgoes BankMuscat’s rights issue (By IFN)

GLOBAL: Dubai Inc may have made significant headway in reducing its debt burden, but challenges remain for some of the emirate’s firms, such as with Dubai Group, which has opted out of a rights issue offered by its 14.7%-owned unit, BankMuscat.

The Omani bank’s rights issue, on offer from the 9th-23rd July, seeks to raise OMR96.7 million (US$251.23 million) via the offer of 226.5 million shares at 0.43 baisa (US$1.12) a share to fund its expansion into Islamic finance, finance credit growth and enhance its capital adequacy ratio.

Dubai Group, which is in the midst of restructuring talks for US$10 billion-worth of debt, reportedly sold its rights to acquire an additional 33.39 million shares of BankMuscat for between 0.03-0.04 baisa (8-10 US cents) in two separate over-the-counter transactions. The rights shares were valued at around 0.06 baisa (16 US cents).

The Dubai conglomerate’s debt burden has created a hurdle for it to invest in its holdings, noted Khalid Howladar, a vice-president and senior credit officer at Moody’s.

This is not the first time the group chose to refrain from its commitments as a shareholder – In 2010, Dubai Financial Group, a Dubai Group company, did not take up an offer to buy into an issuance of preference shares by Bank Islam Malaysia; resulting in a reduction of its stake to 30.5% to 40%.

With Dubai Group’s talks on the repayment of its hefty obligations now hitting a roadblock as a result of a walk-out of its major creditors, its investments, which also include Dubai Bank and Bahrain’s Taib Bank, may need to avoid relying on it for any capital-raising efforts; as the group is more likely to cash out amid its current woes.

See: http://redmoney.newsweaver.co.uk/u1l9ksgfwvlh38rwoni3wx?email=true&a=6&p=25856354&t=21655164