Investors in a Dubai fun-park operator have been on a ride of a less amusing kind with shares of DXB Entertainments PJSC slumping this week to the lowest level since they started trading in 2014.
The company is struggling to attract visitors and its debt is mounting.
The stock is down almost 70 percent since an August 2016 peak, reached before the company opened the Dubai Parks & Resorts theme park, its main attraction. Since then, maintaining the flow of tourists has not been an easy task.
At the time of its IPO, the company set a target 6.7 million visitors to the complex for 2017, its first full year of operation. According to the most recent financial statement, it drew only 2.3 million, and its total loss last year was wider than the average analyst estimate.
The complex, located about 47 kilometers (29 miles) from Dubai’s iconic Burj Khalifa, includes the Middle East’s first Legoland theme park and attractions based on Bollywood and Hollywood films. A Six Flags unit is currently under development. At the same time, the company is talking with banks to restructure $1.15 billion in loans taken to build the facility, according to people familiar with the matter.
“They need a capital injection as soon as possible, parallel to the potential debt restructuring,” said Issam Kassabieh, a senior financial analyst at Mena Corp Financial Services in Dubai. Results that diverged from guidance several quarters in a row “made it hard for analysts covering the company,” he said, adding that the debt to equity ratio “is skyrocketing at the moment.”
A spokeswoman for DXB Entertainments said it “periodically” reviews its capital structure “to ensure we have the right funding terms to meet our strategic objectives” and “continues to receive support from its stakeholders including its financing partners.”
That brought some relief as the shares rose 1.8 percent to 0.58 dirham on Tuesday, breaking 10 straight sessions of declines, the longest losing streak on record.
–With assistance from Matthew Martin and Archana Narayanan
©2018 Bloomberg L.P.