Emaar, the Gulf’s largest listed property developer, yesterday lost almost 10 per cent of its market value as investors reacted to the news that its US unit, John Laing Homes, is seeking Chapter 11 bankruptcy protection.
Emaar has taken impairment charges and write-downs for goodwill of about Dh4 billion (US$1.08bn) since it bought the US home builder for $1.05bn in June 2006. But dealers said it was still unclear whether some of the debts held by John Laing Homes could further weaken Emaar, whose share price has dropped by 85 per cent in the past 12 months.
“There are questions that need to be answered right now,” said Yazan Abdeen, a funds manager at ING Management. “Investors are wondering about the financial obligations that Emaar may have towards its US unit... Who will pay its debt?”
Although Emaar may strike a compromise deal over how much of John Laing Homes’s debt it would have to shoulder, nothing has yet been agreed. “It may be immaterial, or it may be material, the bottom line is nobody knows,” Mr Abdeen said.
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