Restructuring likely at UAE's Tabreed - S&P

Ratings agency Standard & Poor's has cut its ratings on cooling firm Tabreed, after Abu Dhabi intervened on Monday, saying a debt restructuring looked likely and the prospect of further help was low.

Abu Dhabi state investment vehicle Mubadala, which has a 16.7 percent stake in Tabreed, offered a loan to Tabreed on Monday while it completes a recapitalisation programme expected to take most of 2010.

S&P said it had cut Tabreed's long term credit rating to CC from CCC+ as the recapitalisation was likely to lead to "some form of distressed exchange of existing obligations".

It also said there was a low likelihood of further support from Abu Dhabi as the company had "limited importance" to the emirate, and its state links were also limited.

S&P said: "We have revised our opinion of potential timely extraordinary support to Tabreed from the government of the emirate of Abu Dhabi and/or its affiliates in the event of financial distress to 'low' from 'moderate'."

Abu Dhabi has had other calls for its help after neighbouring emirate Dubai, which spent the boom years on huge eye catching construction projects, revealed its deep debt crisis last November.

Larger and richer Abu Dhabi has already stepped in with $10 billion in loans to support Dubai's cash strapped state companies.

The fallout from Dubai's crisis has spread across the UAE federation, with Moody's downgrading seven Abu Dhabi related entities late last week as they did not have an explicit, formal guarantee of government backing.

Dubai listed Tabreed, which provides centralised cooling for projects such as the Dubai Metro and Abu Dhabi's Yas Island and is also known as the National Central Cooling Co, posted a surprise $305 million loss for 2009 due to a non cash impairment charge of 1.16 billion dirhams.

Its shares slumped for a second day on the Dubai bourse, ending 8.8 percent down, having already shed 9.5 percent on Monday.

Tabreed has asked S&P to withdraw all its ratings. (Reuters)