Lombok Developer Emaar to Merge Into Firm With $3.65b Debt
Dubai. The Middle East’s largest real-estate developer and a partner in a troubled joint venture for a mega tourism project in Lombok, said the entity created by its merger with three state-controlled competitors will have 13.4 billion dirhams ($3.65 billion) in debt obligations. Emaar shares dropped the most since November on Sunday.
The debt will be 7 percent of the entity’s total assets of 194 billion dirhams, Dubai-based Emaar said on Sunday in a statement to the local bourse. Emaar’s own debt obligation was 10 billion dirhams, or 15 percent of the total book value of 68 billion dirhams in assets, at the end of March.
Emaar has been in talks to form a partnership with Bali Tourism Development to develop a $600 million resort on Lombok.
The project has been troubled by land acquisition issues and disputes over distribution of shares in the joint venture.
Last week the company gave the Indonesian government a third and final extension— until the end of the year— to resolve the issues.
Reports that Emaar is facing financial difficulties have circulated for some months.
Emaar, the builder of Burj Dubai, the world’s highest tower, said on Saturday that its merger with Dubai Properties, SamamDubai and Tatweer would generate “exceptional” cost savings amid a glut of homes that pushed local property prices down. The consolidation will be completed in October.
Emaar stock fell as much as 10 percent to 2.89 dirhams on Sunday, its lowest close since November 18.
Royal Bank of Scotland Group and Merrill Lynch International are advising Emaar and Dubai Holdings, respectively, on the merger. Dubai Properties, Sama Dubai and Tatweer are units of Dubai Holding, which is owned by the emirate’s ruler, Sheikh Mohammed bin Rashid al-Maktoum.
“The proposed consolidation will create a robust and strategic asset base while joining the strengths of the management teams and employees of these three companies,” Emaar chairman Mohamed Alabbar said in Sunday’s statement.