Dubai-headquartered Gulf Navigation has received shareholder approval to issue a total of AED 100 million in Sharia-compliant bonds to support its plans to expand and diversify its operations. The sukuk will be automatically converted into shares in the company in February next year.
The mandatory convertible sukuk is being privately placed to Wahat Al Zaweya, a real estate development company. At a meeting in November, Gulf Navigation shareholders also approved plans to raise the company’s share capital to AED 1.02 billion.
Gulf Navigation has indicated that it intends using the proceeds of the sukuk to expand its operations. In particular there are plans to buy four livestock carriers in the near future, allowing the company to enter a potentially profitable new market.
Results for the third quarter of 2018 also recently announced by Gulf Navigation show a AED 2.9 million loss, compared with a AED 12.36 million profit in the same period of 2017. Over the first 9 months of the year combined losses amounted to AED 17.751 million, down from a profit of AED 31.39 million in the first 9 months of 2017, reflecting difficult market conditions.
The company has confirmed that during the third quarter it purchased a second-hand vessel to convert into an oil stimulation vessel. Conversion work is now underway on the vessel to allow it to commence a time charter in 2019, and this is expected to have a positive impact on the company’s financial performance levels.