Struggling Dubai retailer takes action to extinguish big chunk of accumulated losses
Struggling Dubai-based retailer Marka has approved plans to reduce the company's capital by AED450 million ($122.5 million).
At its General Assembly, the proposal to decrease its capital from AED500 million to AED49.87 million was backed in a bid to extinguish AED450 million of accumulated losses.
The reduction of capital is done by companies for numerous reasons, including increasing shareholder value and producing a more efficient capital structure.
The assembly also approved the continuity of the company’s operations according to article (302) of the UAE Federal Law No (2) of 2015, a statement said.
The move comes just days after Marka, which is embarking on an ongoing cost control program, announced a total profit of AED5.5 million for the first nine months of 2018.
Marka said the EBITDA figure compared to a reported loss for the same period in 2017 of AED 88.3 million, adding that it is the third consecutive operationally profitable quarter for the company.
Khaled Bin Kalban, chairman of Marka, said at the time: “We have taken rigorous steps in terms of restructuring our business over the course of the last 18 months which can now be seen in the consistent positive results."
He added that the company has also successfully re-negotiated with one of its major lenders, putting Marka "in a strong position ahead of the capital restructure".