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First Group parent signs standstill deal on sukuk

Aurum sukuk The First Group
The First Group's Ciel will be the world's tallest hotel when completed in Dubai in 2024
  • Dubai company Aurum to restructure Islamic bonds
  • Approved by holders of its $135m sukuk
  • First Group develops real estate including hotels

Aurum, parent company of Dubai developer The First Group, has signed an interim standstill agreement with an “ad-hoc” group of creditors while discussions continue on restructuring its Islamic bonds, or sukuk, that are due to mature next year.

Aurum is listed on the London Stock Exchange (LSE). It received the approval of holders of its $135 million amortising sukuk, which is due on August 7, 2024, “to permanently amend the terms and conditions of the certificates”.

This will allow changes to the dissolution distribution payments schedule and other aspects of the terms, according to Reuters.

Sukuk are sharia-compliant bonds that were developed as an alternative to conventional bonds which are not considered permissible by many Muslims as they pay interest, and also may finance businesses involved in activities not allowed under sharia.

The “standstill agreement” has been signed by sukuk holders who have more than 75 percent of the aggregate amount of sukuk, the required threshold to pass a material change to the security agreement.

The agreement will be in place until September 18 and can be extended.

About $126.25 million is outstanding of the total sukuk, issued through TFG Sukuk I Limited, according to Refinitiv data.

Aurum said it made a profit payment due under the sukuk on August 7 as well as a $2 million principal payment, which was also due on that date.

“The company remains committed to working collaboratively with the ad-hoc committee to achieve a successful amend and extend that is fair and equitable to all stakeholders, and will make further announcements in line with the progress of discussions,” a statement to the LSE said.

Founded in 2005, The First Group has a portfolio of hospitality and leisure assets that includes upscale hotels and residences, food and beverage brands and lifestyle offerings.

The developer’s flagship hotel, Ciel, an 82-storey tower in Dubai Marina, is scheduled to complete construction in the first quarter of 2024.

The First Group was contacted for comment.