Dubai-based property company, Meraas Leisure and Entertainment is reportedly planning to undertake the capital restructuring of indebted theme parks operator DXB Entertainments, in a move that leads to the company being taken private.
The minority shareholders in DXB Entertainments (DXBE) would be entitled to $0.0218 (0.08 dirhams) in cash for each DXBE share according to the terms of the deal, valuing the company at $174.25 million (640 million dirhams). DXBE’s current market value is approximately $261 million (960 million dirhams), based on the real-time market data provider Refinitiv Eikon’s data.
Abdul Wahab Al Halabi, Chairman of DXB Entertainments said, “The board of DXBE is in the process of evaluating the offer and will update the market in due course.”
The state-backed Meraas currently owns 52.3 percent of DXBE. The Qatar Investment Authority and Kuwait Investment Authority hold 10.98 percent and 5.07 percent respectively.
“In providing a viable solution to secure the company’s future, Meraas’ proposed offer also aims to protect the interests of other stakeholders, including employees, operating partners, suppliers, and customers,” the DXBE said.
Last month, DXB Entertainments, which was listed in 2014, disclosed that its cumulative losses stood at approximately $1 billion (6.2 billion dirhams), or 78 percent of its capital, at the end of September. It made a net loss of $64 million (238 million dirhams) in the third quarter.
The Meraas also intends to convert a balance of existing convertible bonds issued to Meraas by DXBE in 2018 into new DXBE shares and purchase DXBE’s senior bank debt owed to certain lenders. Also, the property company, which will then own 93.92 percent of the company, expects to exercise its right to purchase the stock of any minority shareholder who has not approved the bid at the same price as the original offer.
The coronavirus pandemic has badly hit Dubai because its economy depends on tourism, transportation, real estate, commerce, and financial services. The International Monetary Fund (IMF) forecast that the economy of the emirate could shrink by 9.8 percent this year, and an 11 percent contraction was estimated by S&P Global Ratings.
DXB Entertainment said in a statement that it was evaluating the offer and would update the market on time.