PHOTO
DUBAI- A group of creditors has hired financial adviser Rothschild and law firm Clifford Chance to help oppose the terms of a proposal by Dubai-listed Emirates REIT to exchange $400 million in Islamic bonds for new instruments, sources said.
Emirates REIT, a sharia-compliant real estate investment trust, last week offered to exchange unsecured Islamic bonds, or sukuk, for secured ones to bolster its balance sheet.
A group of bondholders including local and international funds, as well as regional banks, and representing around 40% of the sukuk holders, met on Sunday to appoint advisers and prepare a counter offer, three sources familiar with the matter said.
The bondholders will revert to the company in the coming days to communicate their concerns and a committee of creditors plans to negotiate a better deal, one of the sources said, speaking anonymously due to commercial sensitivities.
Rothschild and Clifford Chance declined to comment.
REITs manage real estate assets that regularly generate profits, which are distributed to shareholders as dividends.
Emirates REIT's business suffered after years of sluggish performance by Dubai's real estate sector, which was exacerbated by the coronavirus outbreak. Last year, it appointed Houlihan Lokey to advise it on a strategic review.
It plans to extend the existing bonds' maturity to 2024 from 2022, as well as defer coupon payments for a year.
Bondholders may instead try to re-set Emirates REIT's management fees to improve cash flows, the three sources said.
Emirates REIT is also asking bondholders to waive any past or ongoing dissolution events and breaches of transaction documents, without disclosing which, according to the sources and a copy of Emirates REIT's consent solicitation request, which was seen by Reuters.
Representatives of Equitativa, which manages Emirates REIT, and Houlihan Lokey reiterated on Sunday that the exchange offer was "investor-friendly" and that the new instruments would generate more market interest.
"The company confirms that there is no past or currently subsisting event of default or dissolution. The proposed waiver language is customary when exchanging new certificates for old certificates," the representatives said in a statement on Sunday.
(Reporting by Davide Barbuscia, Hadeel Al Sayegh, Yousef Saba; Editing by Alexander Smith and David Goodman ) ((Davide.Barbuscia@thomsonreuters.com; +971522604297; Reuters Messaging: davide.barbuscia.reuters.com@reuters.net))