SHUAA to continue in business

Shareholders have now twice voted against dissolution of the stricken Dubai-based bank.

Shareholders of SHUAA Capital yesterday voted to support the continuation of the Dubai-based bank in business. The quorum was 59.22 percent. Last month they voted unanimously in favour of the same measure.

“As expected, shareholders today expressed their unwavering support for the continuation of SHUAA Capital as a company. Our shareholders recognise that the firm remains well capitalised with AED2.3 billion ($626 million; €475 million) in shareholders' equity and well positioned to overcome the current difficult market cycle due to its strong franchise and market leading position,” stated Majid Al Ghurair, chairman of SHUAA Capital.

SHUAA Capital, which includes private equity arm SHUAA Partners, faced potential dissolution after seeing its share price slump more than 85 percent last year, from AED6.50 per share at the end of 2007, to AED1 per share at the end of 2008.

An ongoing dispute with the Dubai Banking Group (DBG) over conversion of a mandatory convertible note issued in November 2007 has left the bank unable to issue new shares.

SHUAA shareholders voted in March this year to allow the bank's board to enter talks to extend the DBG bond for another year, although no agreement has yet been reached on conversion rights.

Today's EGM gave SHUAA's board of directors the go-ahead to renegotiate the terms of its outstanding AED1.5 billion in mandatory convertible notes.

SHUAA Partners, the bank's private equity wing, held a $240 million first close on SHUAA Saudi Hospitality Fund I in August 2008. The Shariah-compliant fund is targeting a final close on $534 million.