Non-binding Offer Proposed by Jebel Omar to Settle Alinma Makkah Fund Dispute

Jebel Omar Development company have announced on Sunday, that it had made a non-binding offer to of Alinma Makkah Real Estate Fund, in a bid to settle all rights and obligations relating to the fund.

To realize that goal; the company issued 193,068,966 new shares for the fund’s unit owners, in exchange for the following:

All accrued liabilities owed by the company to the fund and/or the parties involved in the fund, consisting mainly of rental due payments and any other liability under the fund-related agreements, shall be settled.

The fund and/or the parties involved in shall waive all their rights – granted to them under the fund-related agreements – relating to the assets of the fund, including their beneficial and legal stakes, to the company.

Furthermore, all guarantees provided in terms of the obligations of the company to the fund and/or the parties involved in the fund shall be cancelled, including the redemption of the encumbered real estates by the company, in favor of the fund (in a “potential transaction”).

The company’s offer is non-binding and subject, inter alia, to the fund’s acceptance of the offer, reaching to a deal with the fund manager (on behalf of the Fund) on the terms and conditions of the potential transaction and the conclusion of a binding agreement, thereon, Jebel Omar said, in a statement posted on Tadawul.

Should a binding deal be concluded, the implementation of the potential transaction would then be subject to several conditions and approvals, including the relevant statutory approvals, which would include approval by the Capital Markets Authority, as well as extraordinary general assembly approval of the transaction, and other conditions to be specified in the binding deal’s terms.

The potential transaction involves the existence of related parties, and a number of board members with interest in the potential transaction, which shall be evaluated and determined by the company, for the purpose of ensuring compliance with applicable regulations. Details on relevant parties and interested members of the board will be made public at a later date.

This comes with reference to the company’s announcement, in connection with the sale of three hotels, and a commercial market to Alinma Makkah Real Estate Fund, and the subsequent re-leasing and operation of assets by the Jabel Omar Development Company, for a period of 10 years, at an annual rent of SR450 million per year.

It also coincided with the developments resulting from the outbreak of Coronavirus pandemic, which adversely affected the Fund’s hotel and rental market revenues and thus the ability of the company to continue paying the annual rent, due to the fund.

That was mainly based on relevant discussions between the company and the fund manager, in this regard.

Additionally, the company’s desire to reach a comprehensive settlement with respect to the fund’s assets, associated rights and obligations, is taking into account the interests of all parties concerned.