Wednesday, December 23, 2009

Dear foreign shareholders, I'd like to present you with these additional shares in Damas, they entitle you to hand over its assets to the bondholders.

Damas released today the share of local and foreign ownership and it turns out that except for the 51% owned by the brothers Abdulla virtually the entire company is owned by non-Emirati nationals. This makes the pledge of the shares of the Brothers Abdullah representing 35% of the outstanding shares impractical. This pledge was made in the event that the brothers Abduallah were unable to repay the $165 million that has found its way into the brothers' Dubai real estate portfolio. If they are given back to the company the reduction of the shares outstanding would put the foreign ownership above 49% and violate the laws of the UAE. It is interesting to note that the folks who got shafted in this were all international investors. Gentlemen, this is why it's called an emerging market.

The company itself requires a debt standstill and restructuring which may or may not be forthcoming. Looks like we may get a test of a DIFC insolvency being enforced in the UAE courts well before Dubai World comes to a head.

Still no action on the part of the authorities.

Well not exactly, the Dubai police did jail a Philipino man for stealing $1000 from a charity box. He should have aimed higher.

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