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Discuss this article (3 Comments)Emaar moves to quell Saudi deal confusion
by This email address is being protected from spam bots, you need Javascript enabled to view it on Tuesday, 16 June 2009
NEW STATEMENT: Emaar on Tuesday issued more information about its role in a proposed mega project in Saudi Arabia. (ITP Images)
Emaar said on Tuesday it still does not know the value of the deal with Kingdom Holding to build the world’s tallest tower in Jeddah, and suggested the Saudi company should have waited with the announcement until a number of other agreements had been finalised.
“As the project is currently at the feasibility and master plan review stage, the level of income currently cannot be envisaged,” the company said in a written response to the UAE bourse regulator, which asked Emaar for detailed clarification about a deal on Monday.
The fee received by Emaar is dependent on the resource cost incurred and to the total development value for the tower.
Related: Shuaa weighs heavy on Dubai index
Emaar is also entitled to an incentive fees if project returns are above a certain threshold, the company said. “In view of all the required agreements not having been finalised as yet, no announcement was made by Emaar in respect of this agreement.
However, Kingdom Holding Company announced the transaction on 13 June 2009 without informing Emaar,” the Dubai-based developer said.
“We shall provide such information subsequent to finalisation of such strategy by the company.”
Shares in Emaar gained 7.18 percent on Sunday, the first day of trading after Kingdom Holding said it had chosen the company to build a tower that will be more than 1,000 metres high in Jeddah, Saudi’s second most populous city.
The share declined 5.74 percent on Monday after the company denied it was investing in the project.
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Joint Statement of Fact to Reuters, Regulators/Financial Institutions would do justice
Posted by Zahid Syed - Senior Contracts Manager & Management Consultant, Jeddah, Saudi Arabia on Tuesday 16 June 2009 at 23:36 UAE time
Kingdom Holding's statement said to have been sent in an EMAIL [In plain and simple English] that "Emaar would be in charge of DEVELOPING and SUPERVISING construction of the Kingdom Tower" IT DID NOT MEAN / MENTION THE WORD 'INVEST'. Did it?
So what mislead Emaar in assuming/saying in a statement to Reuters that "Emaar ... will not INVEST in any projects of this sort," and then say it "would only offer management services for a real estate project against a fee", followed by news that "An Emaar spokeswoman did not have any immediate comment", for clarifting its position.
From the above senario, it is apparent that Emaar misunderstood, and misinterpreted its scope of work, based upon which such confusing announcements were made, hich remain a source of skeptisism. Issuing separate clarifications and statements has not helped, since both parties, along with speculators at the bourses, differ in interpretation of words and scope. The solution would be to immediately issue one or more "Joint Statement(s) of Fact", which would prove more convincing and to the point, as long as approved by both parties, and issued through Reuters / Regulators, and same media that broke the original statements to rectify, remedy and resolve the situation amicably and swiftly, without any undue delay, for the just and mutual benefit of all concerned and affected. GOOD LUCK.
Posted by Zahid Syed - Senior Contracts Manager & Management Consultant, Jeddah, Saudi Arabia on Tuesday 16 June 2009 at 23:36 UAE time
Kingdom Holding's statement said to have been sent in an EMAIL [In plain and simple English] that "Emaar would be in charge of DEVELOPING and SUPERVISING construction of the Kingdom Tower" IT DID NOT MEAN / MENTION THE WORD 'INVEST'. Did it?
So what mislead Emaar in assuming/saying in a statement to Reuters that "Emaar ... will not INVEST in any projects of this sort," and then say it "would only offer management services for a real estate project against a fee", followed by news that "An Emaar spokeswoman did not have any immediate comment", for clarifting its position.
From the above senario, it is apparent that Emaar misunderstood, and misinterpreted its scope of work, based upon which such confusing announcements were made, hich remain a source of skeptisism. Issuing separate clarifications and statements has not helped, since both parties, along with speculators at the bourses, differ in interpretation of words and scope. The solution would be to immediately issue one or more "Joint Statement(s) of Fact", which would prove more convincing and to the point, as long as approved by both parties, and issued through Reuters / Regulators, and same media that broke the original statements to rectify, remedy and resolve the situation amicably and swiftly, without any undue delay, for the just and mutual benefit of all concerned and affected. GOOD LUCK.
Who is at fault?
Posted by May Flowers, Dubai, UAE on Tuesday 16 June 2009 at 16:01 UAE time
So far, Kingdom Holding inaccurately disclosed the intended agreement, and Emaar disclosed the actual progress to date. In my view, both were doing their duty of transparancy. What puzzles me is the speed with which speculators jumped on the band wagon to push Emaar shares by more than 7% before even undestanding the deal. Emaar reacted with their disclosure, and next day the share was down more than 5%. Even more to the point, which was missed by the speculators, these super-tall towers never make really good profit for developers. They are built for prestiege, and that is why not many are being developed. Emaar is wise in avoiding being partner in that tower, and favouring taking advisory fees. It has made its own icon, and paid the price for that, and gained the fame that come with it.
Posted by May Flowers, Dubai, UAE on Tuesday 16 June 2009 at 16:01 UAE time
So far, Kingdom Holding inaccurately disclosed the intended agreement, and Emaar disclosed the actual progress to date. In my view, both were doing their duty of transparancy. What puzzles me is the speed with which speculators jumped on the band wagon to push Emaar shares by more than 7% before even undestanding the deal. Emaar reacted with their disclosure, and next day the share was down more than 5%. Even more to the point, which was missed by the speculators, these super-tall towers never make really good profit for developers. They are built for prestiege, and that is why not many are being developed. Emaar is wise in avoiding being partner in that tower, and favouring taking advisory fees. It has made its own icon, and paid the price for that, and gained the fame that come with it.
Why the late response??
Posted by Joe, Dubai on Tuesday 16 June 2009 at 10:30 UAE time
If Kingdom Holding made their announcement on Saturday June 13th why did Emaar wait until Monday to respond?
Emaar should have made an announcement early Sunday morning before the Dubai Financial Market opened. If Emaar was not prepared to make an announcement then Emaar should have informed the Dubai Financial Market that the press release/story from Kingdom Holding was not 100% accurate, then asked DFM authorities if Emaar stock should not be traded on that Sunday June 14th.
Posted by Joe, Dubai on Tuesday 16 June 2009 at 10:30 UAE time
If Kingdom Holding made their announcement on Saturday June 13th why did Emaar wait until Monday to respond?
Emaar should have made an announcement early Sunday morning before the Dubai Financial Market opened. If Emaar was not prepared to make an announcement then Emaar should have informed the Dubai Financial Market that the press release/story from Kingdom Holding was not 100% accurate, then asked DFM authorities if Emaar stock should not be traded on that Sunday June 14th.
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