Shareholders offered 8 fils against each DXBE share
However, under the terms of the offer, holders of shares in DXBE (excluding Meraas and its affiliate, Meraas Holding (Meraas Holding)) will be entitled to receive AED0.08 in cash for each DXBE offer share.
Key shareholders of DXBE
While Meeras Leisure & Entertainment and Meeras Holding together hold 52.30 per cent in DXBE, Qatar Holding owns 10.98 per cent and Kuwait Investment Authority holds 5.07 per cent in the company, leaving about 31.65 per cent with retail investors.
DXBE’s finances are in such a bad shape with huge accumulated losses and large loans that it would urgently need a capital restructuring with cash infusion in order for the company to keep its head above water.
While the company has piled up accumulated losses to the tune of AED6.22 billion as of September 30, a moratorium on principal payments and covenant testing provided by the syndicated term loan financiers to the group on the outstanding bank facilities of AED4.158 billion is due to expire on March 2021,
The DXB Entertainment and its subsidiaries or DXB Entertainment Group incurred a loss of AED1.061 billion and had a negative operating cash flow of AED155 million for the nine-month period ended September 30, 2020.
“As the majority shareholder of DXBE, Meraas intends to launch the proposed offer to support DXBE’s prospects given its financial condition,” Meraas said in a statement.
Under the terms of the proposed offer, DXBE’s shareholders will be entitled to receive AED0.08 in cash for each share held through participation in a tender offer which, subject to the satisfaction of certain conditions, is expected to be launched in January 2021.
Other terms of the offer
Meraas (and Meraas Holding) intends to convert the balance of the existing convertible bond instrument issued to Meraas by DXBE in 2018 into new shares in DXBE in accordance with its terms.
This will amount to a conversion of AED1.47 billion (being the outstanding balance estimated as at December 31, 2020) into new shares in DXBE at a conversion price of AED1.04 per share.
Meraas intends to acquire the senior bank debt of DXBE, with an outstanding balance estimated at approximately AED4.25 billion, and subsequently convert such senior bank debt into new shares of DXBE at a conversion price of AED0.08 per share.
These exercises will raise the issued shares substantially from approximately 8,000 million to 62,822 million, which consequently will result in Meraas and Meraas Holding acquiring an additional estimated 41.63 per cent in the company, taking the holding by Meraas and Meraas Holding to 93.92 per cent of DXBE’s total issued ordinary shares at that time.
On completion of the main acquisition, Meraas intends to submit an offer to acquire the remaining shares of DXBE (the Original Offer).
Meraas also intends to exercise its rights to acquire the shares of any minority shareholders, who do not accept the Original Offer, by submitting a mandatory notice to force them to accept the Original Offer to sell all their shares in DXBE to Meraas.
Following the completion of the original offer and squeeze-out, Meraas said it intends to procure the de-listing of DXBE from the DFM.
If the valuation report indicates that the fair price per share is more than AED0.08 per share (as offered by Meraas), Meraas has the right to opt out of deal.
Launched in 2014 and listed on Dubai Financial Market (DFM) under the trading symbol DXBE, the company, is the Dubai-based owner of Dubai Parks and Resorts.