Meraas plans to take DXB Entertainments private

Meraas Leisure and Entertainment on Sunday announced plans to attempt a capital restructuring of indebted theme parks operator DXB Entertainments in a move that could also cause it taking the company private.

The business, which along using its parent Meraas Holding, owns a 52.29 per cent stake in the operator of the Dubai Parks and Resorts theme parks, is likely to convert most of the business's outstanding debt into newly-issued shares, which will improve the size of its holding to 93.92 %. It will launch a tender offer to get out remaining stakeholders.

“The proposed transaction intends to provide DXBE with a sustainable capital structure, by reducing debt, amidst a challenging market environment,” Meraas, almost all shareholder of DXB Entertainments, said.

Under the conditions of the proposed offer, DXBE’s shareholders will be entitled to receive Dh0.08 in cash for each share held through participation in a tender offer which, subject to certain conditions, is likely to be launched in January 2021.

Dubai Parks and Resorts first opened in October 2016. It includes a Legoland Dubai, Bollywood Parks Dubai and a Motiongate theme park. However, visitor numbers have already been below forecasts and a proposed expansion to add a Six Flags Dubai theme park was shelved last year. The business has undertaken a reorganisation of park assets and a cost-cutting exercise, but has continued to reduce money. A lack of Dh1.06bn for the first nine months of this year brought accumulated losses to more than Dh6.2bn by September 30.

The proposed restructuring will dsicover an existing convertible bond instrument of Dh1.48bn owed to Meraas and Meraas Holding being changed into new shares in DXBE at a conversion price of Dh1.04 per share, according to Meraas.

Meraas will also undertake Dh4.26bn of senior debt owed by DXB Entertainments in substitution for new shares.

Altogether, 8 billion new shares will be issued, bringing the full total to 62.8bn, which will increase Meraas and Meeras Holding's stake to 93.92 %. It then plans to get the remaining shares from minority shareholders for Dh0.08 per share.

“In providing a viable solution to secure the company’s future, Meraas’ proposed offer also aims to protect the interests of other stakeholders, including employees, operating partners, suppliers, and customers,” the business said.

Earlier this year, DXB Entertainments reached an agreement with banks to defer a "significant proportion" of the interest on a Dh4.2bn syndicated loan to enhance the company's liquidity amid disruptions to businesses consequently of the coronavirus pandemic.

DXB Entertainments will appoint an unbiased valuer to determine if the offer from Meraas is fair. If the report indicates a valuation higher than Dh0.08 per share, Meraas gets the right never to proceed using its offer, the company said.

DXB Entertainments said in a separate statement it really is evaluating the offer and will update the marketplace in due course.