Dubai Parks and Resorts sets terms for Dhs 1.68bn rights issue

Dubai Parks and Resorts announced details for a Dhs 1.68bn ($457.4m) rights issue on Tuesday, saying it would use the proceeds to finance the development of its Six Flags-branded theme park.

The company, which is constructing a resort in the emirate that will consist of theme parks as well as hotels and other attractions, will issue 1.68 billion new shares at Dhs 1 each, it said in a bourse statement.

The stock was trading at Dhs 1.38 at 0655 GMT, down 0.7 per cent. Shares offered in rights issues in the Gulf are traditionally sold at substantial discounts to the stock price to attract local subscribers.

Dubai Parks and Resorts will give shareholders the option to subscribe to one new share for every 3.767 shares currently held during the offer period, which is due to run between May 12 and May 25.

Shareholders who do not wish to subscribe can sell their rights on the Dubai bourse from May 4 to May 18.

Four investors including Qatar Holding, the investment arm of the Qatar Investment Authority sovereign wealth fund, have already agreed to take up a maximum of 538.5 million new shares as part of the offering, the statement said.

The capital increase will boost the number of shares by about 26.5 per cent to just short of 8 million shares, according to Reuters calculations.

Dubai Park and Resorts is part of property developer Meraas Holding, which is owned by Dubai’s ruler Sheikh Mohammed bin Rashid al-Maktoum. It currently holds 60 per cent of the company, according to Thomson Reuters data, and will retain majority ownership after the rights issue.

Cash from the offering will be used primarily to pay for the cost of constructing the park and surrounding infrastructure, including the purchase of the land from a subsidiary of one of the founding shareholders for 390 million dirhams.