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Ernst & Young warns on jeweller Damas’ future

Damas made a full-year loss of 1.91 billion dirhams.

August 2, 2010 11:25 by

Dubai’s Damas may face “significant uncertainty” to operate its business if the jeweller is unable to execute its restructuring plan or extend a debt standstill agreement, the company’s auditors said in a report on Monday.

“In the event that the financial restructuring plan is not signed as envisaged or the standstill agreement is not extended further, there could be significant uncertainty over the ability of the group to continue operating as a going concern,” said Ernst & Young, in a letter published on the bourse’s website.

Damas on Sunday said it made a full-year loss of 1.91 billion dirhams after provisions and non-recurring charges of 1.9 billion dirhams. The Dubai-based jeweller said in July it had extended to Sept. 30 a standstill agreement with lenders on $872 million in debt.

Damas earlier this year replaced its entire board, was ordered by the local regulator to pay hefty fines and said it would restructure its debt after it accused its former chief of involvement in $165 million of “unauthorised” trades.

(Reporting by Nicolas Parasie, Editing by Dinesh Nair)

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