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Prince Alwaleed jumped the gun
Emaar accused Kingdom Holding of making a premature announcement.
June 16, 2009 2:32 by Dana El Baltaji
The public saga between Emaar Properties and Kingdom Holding Company (KHC) may be subsiding after the developer explained the terms of its agreement with the Saudi-based company.
“The agreement [between Emaar and KHC] only stipulated providing Emaar resources for the management of the development process relating to the Project and there is no requirement for Emaar to invest in this project,” said a written statement by Mohammed bin Ali Al Abbar, chairman of Emaar.
“In view of all the required agreements not having been finalized as yet, no announcement was made by Emaar in respect of this agreement. However, KHC announced the transaction on 13 June 2009 without informing Emaar,” it added.
The developer published the statement on the Dubai Financial Market (DFM) website in response to a request made by the Emirates Securities and Commodities Authority (ESCA), the country’s stock market regulator, for more information on Emaar’s deal with KHC.
On Monday, Emaar issued a statement to Reuters denying it signed a deal with KHC to build a kilometer-high tower, after KHC announced a “strategic” alliance with Emaar. “EMAAR are in charge of developing and supervising the construction of Jeddah Kingdom City land and Kingdom Tower, the highest in the world,” KHC said.
News of the deal on Sunday boosted the Dubai Financial Market (DFM) to a seven-month high, with Emaar’s shares rising 7.2 percent. The DFM General Index jumped 4.8 percent to 2,198.31.
However, Emaar’s shares fell 4.3 percent on Monday and a further 1.02 percent on Tuesday after Emaar issued its statement regarding the KHC deal.
“The [negative] effect of the news occurred on Monday,” Kefah Al Mharma, general manager of Al Dar Shares & Bonds explained to Kipp.
Investors acted before they knew anything about the deal, said Al Mharma; “We did not receive a declaration from Emaar about this project, and investors relied entirely on what’s mentioned in the media.”
“At this point, we don’t have any details about the deal, or how will it affect the developer’s revenue,” he added.