Dubai: Meraas Leisure and Entertainment LLC (Meraas), a holding company with multiple landmark projects across Dubai, Sunday announced its intention to undertake a capital restructuring of DXB Entertainments PJSC (DXBE).
The proposal also includes a conditional cash offer to acquire 100 per cent of the issued and paid up ordinary share capital of the DXBE.
“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.
The proposed transaction intends to provide DXBE with a sustainable capital structure, by reducing debt, amidst a challenging market environment. Under the terms 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 the satisfaction of certain conditions, is expected to be launched in January 2021.
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.
Terms of the offer
Meraas (and Meraas Holding) intend 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 Dh1.479 billion (being the outstanding balance estimated as at 31 December 2020 including the amount of principal and accrued interest outstanding) into new shares in DXBE at a conversion price of Dh1.04 per share.
Debt acquistion
Meraas intends to acquire the senior bank debt of DXBE, with an outstanding balance (as at 31 December 2020 including the amount of principal and accrued interest outstanding) estimated at approximately Dh4.255 billion, and subsequently convert such Senior Bank Debt into new shares of DXBE at a conversion price of Dh0.08 per share.
Acquisition of shares
Following the convertible conversion and the bank debt conversion, DXBE will increase its issued ordinary shares 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 resulting in ownership by Meraas and Meraas Holding to 93.92 per cent of DXBE’s total issued ordinary shares at that time.
Following completion of the above, Meraas intends to submit an offer to acquire the total shares of DXBE (the Original Offer). Meraas also intends to exercise its rights to acquire the shares of any minority shareholders that did not accept the Original Offer by submitting a mandatory notice to force the minority shareholders that did not accept the Original Offer to sell all their shares in DXBE to Meraas.
Delisting
Following completion of the original offer and squeeze out, Meraas intends to procure the de-listing of DXBE from the DFM.
As per the Merger and Acquisition Rules issued by the Securities and Commodities Authority, DXBE will appoint an independent valuer to prepare a valuation report to determine DXBE’s fair price per share. If the valuation report indicates that the fair price per share is more than Dh0.08 per share (as offered by Meraas), Meraas has the right not to proceed with the transaction or any of part of it as described above.
DXBE comprises three separate theme parks: Motiongate Dubai, a Hollywood movie inspired theme park; Legoland Dubai, the first Legoland theme park in the Middle East; and Bollywood Parks Dubai, a first-of-its-kind entertainment destination that showcases the authentic Bollywood movie experience. It is also home to a Legoland Water Park.
The entire destination is connected by Riverland Dubai, a uniquely themed retail and dining destination and guests can stay at the Lapita Hotel, a Polynesian themed family hotel, a part of the Marriott Autograph Collection.
The large-scale Dh13.2 billion development is located on Sheikh Zayed Road opposite the Palm Jebel Ali in Dubai equidistant to Dubai and Abu Dhabi International Airports.