NewsKhoie Properties ‘insolvent’, says CFO
Khoie Properties, the developer behind Dh2bn La Hoya Bay which was sold to Rakeen last week, is insolvent its Chief Financial Officer said on Saturday.
La Hoya Bay is located on the man-made island of Al Marjan in Ras al Khaimah and was sold to 800 investors, of which 50 % are from the UK. The investors are pressing the Government of RAK to intervene because little progress has been made on the project.
“The company being insolvent means you are unable to meet your liabilities. So it is basically insolvent,”
said Ahmad Jazayeri, the chief financial officer of Khoie Properties.
Senior member in jail
A senior member of the board of Khoie Properties has been in jail for nearly two months after being detained for allegedly bouncing a Dh57m cheque written to pay for the land.
“He is in prison for one bounced cheque worth Dh57m, but every six month there is another cheque,”
said Wahid Attalla, the executive director of Rakeen, the property arm of Ras al Khaimah Investment Authority (RAKIA).
“Honestly, he does not have enough funds to meet his obligations,” Mr Jazayeri said, confirming a senior member is detained.
Investors pushing RAKIA
The La Hoya Bay Investors Group have faith in the project and 70 investors have signed a petition encouraging RAKIA to take over the project and finish it
“We are delighted that RAKIA is in negotiations with Khoie to save this exciting project and to retain the existing investors,” said Ashley Merry, a spokeswoman for the La Hoya Bay Investors Group. “We still have faith in La Hoya Bay. We are grateful that they have actually taken an interest and are negotiating, whatever the outcome.”
Both RAKIA and Rakeen, the buyer of La Hoya Bay, are in talks with Khoie to ascertain the developers’ liabilities. A possible takeover has been suggested but RAKIA resist this option:
“I do not think such a deal will happen,” said Khater Massaad, the chief executive of RAKIA. “The problem if we take over the project is that we will have to put in cash. Khoie Properties collected Dh280m and only spent Dh50m in the construction of the project.”
Mr Jazayeri said that two-thirds of the investors’ contributions had been spent on the project.
History
In 2007, Khoie bought plots of land for La Hoya Bay from RAKIA, worth a total of Dh306m, and began off-plan sales to investors. Instead of paying the total amount, Khoie paid Dh72m to the authorities and provided post-dated cheques every six months to cover the outstanding amount. Mr Jazayeri said the next cheque was due in June.
Close to making a decision
According to Mr Attalla, the government is close to making a decision.
“What we have is a developer who is more or less bankrupt and the Government of Ras al Khaimah, represented by RAKIA, is trying to find a solution for the sake of the investors. But it is all about how much liability there is. There is a limit to how much we can do.”
Further Reading
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