Dubai Banking opts not to accept Shuaa shares

NO DEAL: Dubai Banking Group chairman Ahmad Bin Byat.

Shares in Shuaa Capital fell by up to 9.9 percent after Dubai Banking Group declined to take delivery of 250 million shares issued by Shuaa earlier on Tuesday, a move that would have given it a 32 percent stake in the firm.

“Following numerous attempts at achieving a reasonable settlement with regard to the note with Shuaa Capital, Dubai Banking Group… elected not to convert the note but rather to redeem the note at its principal amount in accordance with the note and applicable laws,” Dubai Banking Group chief executive Ahmad Bin Byat said in a letter to the Dubai bourse.

The Dubai Financial Market (DFM) said it would not register the shares issued by Shuaa in the name of Dubai Banking Group until the two parties have reached an agreement.

Earlier on Tuesday, Shuaa announced it was exercising its right to convert AED1.5bn ($408.5m) worth of convertible bonds issued to Dubai Banking Group in 2007.

After the conversion, Dubai Banking would have held a 32 percent stake in the UAE’s largest investment bank.

On June 7 the two companies extended a deadline for restructuring the bonds until June 15.

Shuaa said the extension had been agreed on in order to avoid legal disputes.

“We will not accept delivery of the conversion shares issued by Shuaa Capital in contravention of our election and respectfully request you not to effect registration of any shares in Shuaa Capital in the name of Dubai Banking Group without our express consent,” Dubai Banking’s Bin Byat said in the letter to the DFM.

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