The International Fish Farming Holding Company, better known as Asmak, has inked a deal with an Abu Dhabi company that will provide it with Dh420 million (US$114.34m) to help it expand and return to profit.
Royal Group, a holding company based in Abu Dhabi, has agreed to buy two-year convertible bonds from Asmak, according to a December 29 filing to the Abu Dhabi Securities Exchange.
"We are using the money to invest in the company," said Mohammed Helal al Muhairi, a vice chairman of Asmak.
"Our strategy is to expand what we are already doing - aquaculture and fisheries - but also to expand into new areas so we can obtain sustainable profit for our shareholders."
He said Asmak would use the funds to revive its fish-farming business and expand into other sectors and acquire companies to help its profit flows and allow it to award dividends. The largest single shareholder of Asmak is Hydra Properties, a development company fully owned by Royal Group, which has a 47 per cent stake.
The convertible bond could make Royal Group a major shareholder when it matures in two years.
The debt issuance is a sign of the challenges Asmak has faced in the fish-farming business, which can take years to become profitable because of the costly and complex process of setting up and developing aquaculture facilities.
While Asmak initially focused on building farms in the Emirates, it discontinued operations in the UAE and Oman in 2009 because of red tides - huge blooms of oxygen-depleting algae - that threatened to suffocate its fish.
Now Asmak focuses primarily on the less profitable sourcing of fish from around the world for local supermarkets and catering companies.The company was originally spun off by the UAE Offsets Group with funding provided by Dassault Aviation after the country bought Dassault's Mirage fighters.
Under UAE rules, defence and aerospace companies doing business with the country must create projects that contribute to other sectors of the economy to a value equivalent to 60 per cent of the value of their contracts.
But Asmak has struggled to make sustained profits. It posted a Dh1.38m loss for the third quarter last year, compared with a Dh2.55m loss in the same period in 2009.
In early 2008, the company created a subsidiary called Emirates Stallions Properties in a bid to take advantage of the property boom.
It spent Dh140m on four plots of land on Abu Dhabi island and paid Dh35m on other property, which is not yet fully paid up, according to financial records. It bought some of the property from Hydra Properties, according to a source familiar with the company. Hydra Properties declined to comment.
Fish farming is a particularly challenging business. Jean-Yves Mevel, a manager for an aquaculture project from Al Bayan Holding Company in Saudi Arabia, said the region had huge potential for fish farms because the warm waters resulted in fish stocks maturing quickly.
But he said the aquaculture business was particularly tricky and took a long time to yield returns.
"A lot of licences are given across the region, but they are taken away again because [operators] don't do anything or they give up," he said.
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Citadel: Honey Bunny first episode
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Rating: 4/5
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The Gandhi Murder
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Stars: Suriya, Bobby Deol, Disha Patani, Yogi Babu, Redin Kingsley
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COMPANY PROFILE
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Total funding: Self funded
If you go
Where to stay: Courtyard by Marriott Titusville Kennedy Space Centre has unparalleled views of the Indian River. Alligators can be spotted from hotel room balconies, as can several rocket launch sites. The hotel also boasts cool space-themed decor.
When to go: Florida is best experienced during the winter months, from November to May, before the humidity kicks in.
How to get there: Emirates currently flies from Dubai to Orlando five times a week.
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Our legal columnist
Name: Yousef Al Bahar
Advocate at Al Bahar & Associate Advocates and Legal Consultants, established in 1994
Education: Mr Al Bahar was born in 1979 and graduated in 2008 from the Judicial Institute. He took after his father, who was one of the first Emirati lawyers
THE BIO
Favourite book: ‘Purpose Driven Life’ by Rick Warren
Favourite travel destination: Switzerland
Hobbies: Travelling and following motivational speeches and speakers
Favourite place in UAE: Dubai Museum
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Electoral College Victory
Trump has so far secured 295 Electoral College votes, according to the Associated Press, exceeding the 270 needed to win. Only Nevada and Arizona remain to be called, and both swing states are leaning Republican. Trump swept all five remaining swing states, North Carolina, Georgia, Pennsylvania, Michigan and Wisconsin, sealing his path to victory and giving him a strong mandate.
Popular Vote Tally
The count is ongoing, but Trump currently leads with nearly 51 per cent of the popular vote to Harris’s 47.6 per cent. Trump has over 72.2 million votes, while Harris trails with approximately 67.4 million.
Business Insights
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From Zero
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Label: Warner Records
Number of tracks: 11
Rating: 4/5
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The specs: 2018 Honda City
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Engine: 1.5L, in-line four-cylinder
Transmission: Continuously variable transmission
Power: 118hp @ 6,600rpm
Torque: 146Nm @ 4,600rpm
Fuel economy, combined: 5.8L / 100km