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Dubai-listed Shuaa Capital has issued its mandatory convertible bonds (MCBs) under a year-long debt restructuring process.
The investment bank on Tuesday issued AED 359 million ($97.7 million) in two tranches – AED 274 million to existing noteholders of its $150 million bond, which expires at the end of March after two extensions, and AED 85 million to new investors.
Existing noteholders include GFH Financial Group, to which Shuaa will issue AED 78 million in MCBs with a conversion price of AED 0.32. Shuaa stocks are currently trading at AED 0.23.
Bahrain-based GFH Financial Group invested $35 million (AED 128 million) in the original bond, issued by Cayman Islands entity Shuaa Capital Bond Limited in October 2020, which initially expired in October 2023 and was subject to two extensions.
The MCBs will bear no interest and will convert into shares subject to a lock-up period of 14 months from conversion.
The Dubai-listed investment bank is awaiting Securities and Commodities Authority (SCA) approval to increase share capital and convert the MCBs into shares.
GFH said the issuance gives it exposure to “significant upside” expected from Shuaa post debt restructuring and an expected return to profitability.
Abu Dhabi-listed Eshraq Investments will subscribe to AED 50 million in the new investor bond, with Al Baher Real Estate and United Motors & Heavy Equipment as the remaining MCB holders.
Eshraq, of which Shuaa is the largest shareholder, holding 18.4%, said the subscription to the MCBs makes it a strategic shareholder, better positioning it to advance objectives including the redemption of key assets managed by Shuaa.
Shuaa’s Abu Dhabi arm Shuaa GMC currently manages the Goldilocks Fund, of which Eshraq acquired 99.25% in a share swap deal in 2022.
(Writing by Imogen Lillywhite; editing by Seban Scaria)
