Dubai- Emirates steel pipe: Steel unit promoters may face legal action

Gulf News, Dubai |By Manoj Nair | 28-03-2002
Four more creditor banks are considering taking up legal proceedings against the promoters of the defunct Emirates Steel Pipe Factory in the Jebel Ali Free Zone, confirmed a source closely associated with the proceedings.
The plant has been shut down since last November, based on a court order received by Mashreqbank, which was until now the sole bank to do so. It is estimated that the promoters owe over Dh30 million to the local market.
The decision by the other banks involved with the factory to press charges follows the breakdown of talks held by all parties concerned with one of the shareholders in the venture - Kuwait based the International Investor (TII), the source added.
"All banks involved had two set of meetings with TII officials in recent weeks. Nothing concrete emerged out of it," said a source.
"TII wanted the creditor banks to write off up to 80-90 per cent of the monies owed by Emirates Steel Pipe Factory. But that was an impossible demand and was instantly rejected by the banks concerned."
The source added: "We are still hopeful that TII will come out with more concrete proposals. In fact, we are awaiting some sort of development in the next few days."
The promoters, who are no longer in the country, also owe nearly Dh1 million to the free zone authorities.
Emirates Steel Pipe Factory has a paid up capital estimated at about $1.6 million. TII has a 50 per cent stake in the venture, acquired in 1998, while the two original promoters share the remaining.
The creditor banks are HSBC, United Arab Bank, Mashreqbank, National Bank of Fujairah, Emirates Bank International and ABN Amro among others.
If court proceedings are initiated, one of the options would be to have an auction to raise cash. With all operations having ceased since November, and most of its staff having left, it is a moot point whether the enterprise has any sort of commercial viability left, sources added. In fact, employees were unpaid since June 2001.
"With each passing day, the chances that matters can be turned around becomes all the more remote. Given that court proceedings take time, many months may elapse before a concrete action can be initiated," the source said.
In recent weeks, there were a couple of interested parties which made tours of the shuttered plant. However, so far, nothing concrete has emerged on the table.

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