Emaar Properties, the largest developer in the Middle East, is facing major challenges to its balance sheet because of problems with an Indian joint venture and the heavily indebted mortgage company Amlak Finance, an analyst says.
Majed Azzam, of Alembic HC Securities, lowered his rating on Emaar to "neutral" with a "bleak outlook" yesterday.
The decision followed Emaar's discussion last week over potentially converting some of Amlak's debt into equity. Converting Dh800 million (US$217.8m) would increase Emaar's stake in Amlak to 66 per cent from 45 per cent. Such a move would most likely require Emaar to consolidate Amlak's obligations on to its own balance sheet. Because of Amlak's considerable liabilities, Emaar's total debt would rise to Dh17 billion from Dh6.7bn, Mr Azzam said.
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