Lombok Developer Emaar to Merge Into Firm With $3.65b Debt

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.

That's very interesting Gemma. Thank you for that. I'm not sure what to make of it though. I'm not in favor of their development on Lombok. But if it goes through I will look for the positive and try to live with it. Sounds like they have a better chance of success with more assets. And if they partner with Bali Development they will have someone who is experienced on the way things work in Indonesia. If they only have until the end of 2009 for all the land aquisitions, things could get very busy around Kuta if they're serious. I've heard talk of forced land forfeitures in downtown Kuta which could involve our little piece of paradise. Looks like we should know if it's true soon. On a closing note. Any company that says they're going to take on a project like this which includes a marina and claims it will be done in an environmentally conscious manner. A company that built an indoor ski resort in the desert and made islands out of desert sand is not being truthful. Tom. PS. Hi Gemma from Tom and Susi. You in Lombok or Bali these days?

Hi Tom

Back and forth but more in Bali these days. They have started work on widening the roads into Kuta both infront and behind of Mimpi Manis, also grading them (I think thats what you call it!) making them level rather than hilly. Luckilly we havent had to lose any land out front after all but we did lose our back wall and Kiosk. But better that than the front where it would have been a disruption for our guests. As well as being much harder to rebuild because of the retaining walls needed.

We shall see what happens with the Emaar development....