Jabal Omar offers 193.1 mln new shares to Alinma Makkah Fund to settle dues

Logo of Jabal Omar Development Co.

Jabal Omar Development Co. submitted, on Sept. 12, a non-binding offer to Alinma Makkah Real Estate Fund’s manager to settle all payment obligations and other liabilities owed by the developer to the fund.

The developer said in a bourse filing that a total of 193.07 million new shares in the company were offered to the fund’s unitholders.

The offer aims to settle all payment obligations and other liabilities owed by Jabal Omar to the fund or its related entities. This mainly comprises rent payments owed, along with other obligations under the agreements related to the fund.

It also noted that the fund and its related entities waived their rights over the assets, including ownership and other rights.

All collateral and security granted by Jabal Omar to the fund and its related entities will be released and terminated, including the collateral and security of the mortgaged assets, according to the offer.

The step follows the negative impact of the COVID-19 pandemic, which resulted in a decrease in Jabal Omar’s revenues generated from leased hotels and commercial areas, leading to the company’s inability to pay annual rent due to the fund, the statement said.

The offer is based on relevant discussions and negotiations between the company and the fund manager, the statement added, noting the developer’s desire to reach a full and final settlement with the fund.

According to the firm, the offer is non-binding and subject to conditions, including its acceptance and agreement by the fund manager.

If the binding agreement is executed, the implementation will be subject to approval of the relevant regulatory authorities, including the Capital Market Authority (CMA), and Jabal Omar’s extraordinary general assembly. It also requires fulfilment of other conditions specified in the binding agreement.

SNB Capital was appointed as the company’s financial advisor, and Abuhimed Alsheikh Alhagbani Law Firm (AS&H) was appointed as legal advisor, the statement said.

The potential transaction involves a related party, and a number of the company’s board members have an interest in it. This will be assessed to ensure compliance with the relevant laws and regulations.

Related party and board member details will be announced later, the company said. It will also announce further material developments in due course.

In March 2017, Jabal Omar signed a contract to sell three hotels, namely, Makkah Conrad, Hilton Makkah and Hyatt Regency Makkah, in addition to the Al Khalil Shopping Center, to Alinma Makkah Fund for SAR 6 billion, Argaam earlier reported.

The sale was based on the agreement that the fund will re-lease the assets to Jabal Omar for 10 years, while the developer will retain the right to re-purchase the assets after five years from the fund’s 10-year term.

On Oct. 22, 2017, Jabal Omar said it invested an in-kind share of SAR 1 billion -- to be deducted from the sale price -- in Alinma Makkah Fund.

Last year, the developer decided to suspend rental payment from May to November 2020, amounting to SAR 270 million, due to force majeure resulting from COVID-19 pandemic.