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Tuesday, 11 May 2010

Du to Sell Stock at 1.75 Dirhams Each to Raise 1 Billion Dirhams

Du, the phone company also known as Emirates Integrated Telecommunications Co., said its shareholders approved a plan to raise 1 billion dirhams ($272 million) by selling 571.4 million shares at 1.75 dirhams each.

The rights share offer would be implemented within three months and would increase the company’s capital to 4.57 billion dirhams from 4 billion dirhams, Du said in a statement to Dubai bourse today.

Du said earlier today first-quarter profit rose fourfold as it gained subscribers and introduced new products. Net income climbed to 97 million dirhams from 23.4 million dirhams.END

Dubai Leads Gulf Stocks Lower on Dubai Holding Debt Concern

Dubai’s benchmark index led declines among Gulf Arab markets on concern Dubai Holding LLC, a company owned by the emirate’s ruler, may have to restructure some of its $12 billion in debt and as European stocks fell.

Emirates NBD PJSC, the United Arab Emirates’ largest bank by assets, dropped for a second time this week. Emaar Properties PJSC, developer of the world’s tallest tower, retreated 1.8 percent. Union Properties PJSC was poised for the lowest close in more than a week. The DFM General Index lost 1.3 percent to 1,718.13 at 12:29 p.m. in Dubai. Oil pared yesterday’s gain, dropping 0.9 percent.

Dubai Holding, owned by Sheikh Mohammed Bin Rashid Al- Maktoum, and its units owe banks $12 billion, a person with knowledge of the matter said yesterday. Dubai International Capital LLC is talking to banks to refinance a $1.25 billion loan due in June and Dubai Holding Commercial Operations Group LLC, asked lenders to roll over a $555 million credit facility due in July, the person said. / Middle East - US urged to probe Saudi business spat

A senior Republican congressman has urged the Department of Justice to examine whether the US banking system was used for money laundering or fraud in connection with a multibillion dollar dispute between two Saudi companies.

Peter King, the senior Republican member of the House of Representatives homeland security committee, said he was concerned about “potential lapses in oversight over the national banking system that may allow US financial institutions to perpetuate massive global money laundering originating from persons in the Middle East”.

Mr King expressed his concerns in a letter to Eric Holder, the US attorney general. He was referring to allegations made in a bitter dispute between two family-owned Saudi businesses, Ahmad Hamad Algosaibi and Brothers (AHAB) and Saad Group, owned by the billionaire Maan al-Sanea.

UAE's $11 bln rail projet bidding in 2 mths, UAE Rail, Transportation - Maktoob Business

Union Railways Co, the government-owned firm in charge of an estimated $11 billion United Arab Emirates railway, said it plans to open the project to interested bidders in the next two months.

"We will be starting a formal solicitation process to seek expressions of interest in the relatively near future," Chief Executive Richard Bowker told reporters on the sidelines of a rail conference on Tuesday.

"Expressions of interest will begin in the next two months," Bowker earlier told the conference, noting that the 1,500 kilometre railway network will operate on diesel engine but can be converted to electric.


Apologies for the tabloid headline. I’ve been wanting to use that photo for months and I just got the chance.

So while I was distracted by watching the Eurozone melt down and then today melt up I missed a very important story in Dubai. The Abdullah Brothers have missed their first payment of $55 million of the $165 million and two tons of gold they stole from their public shareholders.

If you have been reading my blog for a while I have written extensively about massive theft from the shareholders of Damas by the Abdullah Brothers. I began with a two part article about how the theft was undermining the confidence of the DIFC. I wrote a few other pieces about the ridiculousness of the fact that the Abdullah Brothers were allowed to negotiate with themselves the terms of their repayment. I begged the DFSA to do something and then I celebrated the DFSA when they did in fact take action.

Well, it might be time for a bit more action to be taken. The Abdulla Brothers were supposed to make a $55 million payment at the end of April and they have not done so. In fact from what I can gather from the various news sources they haven’t even made a partial payment. Damas put out a statement saying that the payment was missed because of the complexity involved in liquidating the assets. They also point out that under the terms of the confidential agreement between the Abdulla Brothers and Damas the missed $55 million did not constitute an event of default.

Now let me get this straight. In their Enforceable Undertaking with the Abdullah Brothers the DFSA mandated that they had to repay the money they stole from Damas according to the terms of their original agreement. At the time that agreement was written one of the Brothers was in fact the Chairman and another was the MD responsible for daily operations. The CEO was non-Emirati and so presumably had little say. Now it comes out that A.) missing a payment of $55 million does not constitute an event of default and B.) the agreement is secret?

You have got to be kidding me. The DFSA signed off on a secret agreement whereby non-payment is not an event of default? If non-payment is not an event of default what the heck is an event of default. Of course we’ll never know for sure BECAUSE THE AGREEMENT IS A SECRET! Was it a secret from the DFSA at the time they agreed for it govern the restitution to Damas? I do have to say that it was very forward thinking of the Abdullah Brothers to negotiate this agreement WITH THEMSELVES and then make it confidential.

And what is the reason for the delay? Complexity? You have to be kidding me. According to an earlier article in the National they own four boats. How complicated is it to sell a boat in Dubai? I’m pretty sure they get sold all the time. What is this about Damas “working with the Abdulla Brothers?” Why are they working with them? Why are they not simply holding a massive auction and blowing out of all the Abdullah Brothers assets to the highest bidder until they get to $165 million? How complex would that be? There’s even a company in Dubai that Damas could hire to do it. Or better yet the DFSA should be doing it.

The signatory to the Enforceable Undertaking (EU) on behalf of the DFSA is Steve Glynn. I know Steve and I think he’s a good guy. I think he should do the following. I think he should find the nearest telephone booth in the DIFC. He should enter said telephone booth as his mild mannered self and emerge as his regulatory super-hero alter ego: THE ENFORCMENT UNDERTAKER and he should enforce the enforceable undertaking.

He should make the repayment agreement a matter of public record first of all so that the poor long suffering shareholders of Damas can know what they’re in for. Then if there is in fact no circumstance in which the Abdullah Brothers can be put into default he should declare that the agreement does not meet the requirements of the Undertaking and should invoke article 17 of the Undertaking. This would enable him to declare them in default and use the remedies he has under law to enforce the lien on their assets and start auctioning them off until they get to $165 million and the shareholders are made whole. If the Abdulla brothers are bankrupted or reduced to penury by this then those are the breaks. Maybe the next guy who does an IPO on the DIFX won’t rig the book building process and then steal the proceeds.

Sometimes I really don’t understand Dubai. Here you have Dr. Omar in jail and all he did was pay himself $15 million dollars for what, at the time, seemed like a good job of attracting firms to the DIFC. These guys STEAL $165 million, more than ten times what Dr. O gave himself, from their shareholders and are walking around free men with the liberty to choose among their four yachts on which to indulge their passion for fishing all the while missing the first payment deadline imposed on them by the regulator. The Damas fraud is a bigger black eye for Dubai than Dr. Omar times a thousand.

Dubai is worried that firms are leaving the DIFC and have hired McKinsey to find a way to attract firms to the Center. I’m going to write something more in depth on this but I’ll save them a few million dollars on their McKinsey fee right here: the only advantage that Dubai has as a financial center to counter the fact that it has NO money is the idea that the DIFC has a regulatory regime which is more attractive than any of the other Gulf States.

The letter of the legal and regulatory system really IS qualitatively better for executing financial transactions than the surrounding jurisidictions. But in law as in life the letter is only as good as the spirit. By letting the Abdullah brothers make such an obvious mockery of it that I can write articles like this for months Dubai is destroying its only advantage. If you want to keep people in the DIFC don’t let favoured Emiratis rob shareholders blind and then so obviously get away with it that I can write article after article for months saying out loud what everyone in every bank is thinking.

Come on Dubai. It’s time to step up, there’s a game on here. You took the crown from Bahrain, do you have what it takes to keep it?END

Saudi Aramco at 77, a street with no name

Two years ago Saudi Aramco celebrated 75 years of oil exploration in Saudi Arabia. It was only 6 years after King Abdul Aziz announced the creation of the Kingdom of Saudi Arabia. That was in 1932, so in 1938 oil was discovered in oil well No. 7.

To a lot of analysts, the date of oil discovery in Saudi Arabia is when the map of strategic influence changed.

The celebration in Dhahran, to mark Aramco’s 75 years, was attended by King Abdullah. Hundreds of Saudi royal family members and thousands of Saudi dignitaries too attended the event. In addition, to hundreds of Americans, including some of the older generation of Americans who first came over during the 1940s to Saudi Arabia, there was a possibility at the time that President Barack Obama was going to attend.

GCC works to bridge gaps in road to union

Calls for Arab and Gulf unity have often been viewed as mere rhetoric, but amid the oratory, the six states of the oil-rich Gulf Co-operation Council are moving towards closer economic co-operation and deeper integration.

The road is often bumpy, beset by regional politics. Oman and, more importantly, the United Arab Emirates have opted out of a long-awaited currency union . Diplomatic spats, including a hushed-up naval skirmish between Saudi Arabia and the UAE, continue to blight relations.

Yet since the GCC was established in 1981, partially as a response to the Iranian revolution and the Iran-Iraq war, vital steps have been taken towards closer economic ties.

Qatar, the tiny gulf state that bought the world

For more than 120 years, Harrods has traded under its suitably select Latin motto "Omnia Omnibus Ubique": "All Things for All People, Everywhere". As global aspirations go, such a logo was always perhaps a little overstated for a retail empire with just one, admittedly eye-catching, outlet in Knightsbridge.

Now, after a century or so of peddling consumer durables – from Ceylon tea to ruby-encrusted shoes guarded by a cobra – to a clientele that encompasses Oscar Wilde, A A Milne, Russian plutocrats and visiting VIPs, it seems that the Harrods brand may finally be about to live up to its slogan thanks to the rise and rise of an Arabian emirate the size of Yorkshire which has £43bn burning a hole in its very deep pockets.

Qatar Holding, one of the investment arms of the hugely-wealthy Qatar state and royal family, signalled yesterday that it is considering opening a new flagship Harrods shop in China after it completed a £1.5bn deal on Saturday to buy London's department store from Mohamed al-Fayed.