Nasdaq-Dubai listed Damas International has said that it has signed an amended Gold Fixing Agreement with the Abdullah Brothers to fix the price of 1,940,250 grams of gold as well as to extend the payment date for Dh400 million ($110m) payable by the Abdullah Brothers to Damas from October 31, 2010 to January 31, 2011.
“If the Cascade Agreement is not signed on or before January 31, 2011, the amount of Dh 400m will become payable immediately and the remaining balance will become payable in accordance with the payment periods described in the November announcement,” said a statement posted on the Nasdaq Dubai website.
“Damas notes that, while it expects the Cascade Agreement will be signed before January 31, 2011, there is no certainty that any such agreement will be signed on or before such date or at all. If the Cascade Agreement is signed, the terms of any final signed agreement will be reported to shareholders in more detail pursuant to Damas' obligations,” the statement added.
The announcement was made to comply with the continuous disclosure requirements of the Offered Securities Rules and Nasdaq Dubai Listing Rules, the statement said.
It has been agreed to fix the price of the 1,940,250 grams of gold to reflect the total amount outstanding and payable by the Abdulla Brothers in terms of currency. As per the fixed price, the Abdulla Brothers have undertaken to pay Dh256 million in terms of the price of gold withdrawn by them. The price of gold has been fixed after evaluation of several factors including the price of gold prevailing at the time of withdrawal and certain benchmark transactions that have taken place in the records of Damas thereafter, said the statement.
It was earlier agreed that the cash amount of Dh 358m was payable by the Abdullah Brothers to Damas and that, based on such gold price and such cash amount, the net amount to be repaid by the Abdullah brothers to Damas in accordance with the Settlement Agreement was Dh 614m, comprising Dh358 m in cash and an amount equivalent to gold with a value of Dh256m.
“Damas notes that the amount of dH365m, which was referenced in the Enforceable Undertaking as the cash amount owing by the Abdullah Brothers to Damas is now reflected to be Dh358 m after considering certain historical recoveries from the Abdullah Brothers, which have been accounted for in the financial statements of Damas,” the statement said.
Damas International has previously made the following announcements to the market:
On 25 October 2009, Damas announced that it had entered into a settlement agreement (the "Settlement Agreement") with the Abdullah Brothers under which the Abdullah Brothers had undertaken to repay to Damas an amount in respect of certain transactions between the Abdullah brothers and Damas;
On November 4, 2009, Damas announced that the Abdullah Brothers had undertaken to repay to Damas an amount of $55m within six months, an aggregate of $110m within 12 months, an aggregate of $165m within 18 months; and, any balance in excess of the $165m within 24 months;
On March 21, 2010, Damas announced that it had entered into an enforceable undertaking published on March 21, 2010 with the Dubai Financial Services Authority under which, amongst other things, Damas agreed that the total amount owed to Damas by the Abdullah Brothers was approximately Dh365m in cash plus the value of approximately 1,940,250 grams of gold, the price of which was to be fixed on a date agreed by Damas and the Abdullah Brothers;
On September 19, 2010, Damas announced that it was in the final stages of negotiating a cascade agreement with, among others, the Abdullah Brothers, which would provide the legal framework for an orderly liquidation and realisation of cash proceeds from the sale of the assets of the Abdullah Brothers and two companies -- Damas Real Estate and Damas Investments owned by the Abdullah Brothers.