UAE's Tabreed shares slide after dividend announcement

District cooling form sees shares fall 5.3 percent after announcing 5 fils per share dividend

District cooling firm Tabreed's shares plunged on Monday after the company announced plans to issue more convertible bonds to its key shareholder Mubadala as part of its first dividend payout since 2007.

Shares of Tabreed dropped 5.3 percent on the Dubai bourse , where the main index was up 0.2 percent.

The utility firm proposed to pay a cash dividend of 5 fils per share to all its shareholders, it said in a bourse filing.

In addition to the cash dividend for its holding of common shares, Mubadala, a state-owned fund, will receive non-coupon bearing mandatory convertible bonds for its bond holding, a spokesman for the company said.

"Tabreed will issue more convertible bonds to its key shareholder Mubadala so the number of shares will increase and the value of the shares will fall," said Ashraf AbuShakram, head of institutional sales and regional trading at Abu Dhabi Islamic Bank, explaining the drop in share price. "And more bonds means more debt."

The Dubai-listed company, which received funds from Mubadala to restructure its debt in 2011, said the bonds for Mubadala could be converted into Tabreed shares by April 2019.

The proposals are subject to shareholder approval at the company's annual meeting, to be held on April 9.

Tabreed secured AED3.1bn of financing from Mubadala in March 2011 to help tackle its debt pile. In December last year, the cooling firm agreed to issue AED1.13bn of convertible bonds to Mubadala as part of a recapitalisation plan. Mubadala now owns 14.8 percent in Tabreed.

The cooling firm reported a 30-percent rise in quarterly profits fueled by higher revenues from its core chilled water business.

Shares of Tabreed have climbed 39.7 percent this year on the Dubai bourse.

Join the Discussion

Disclaimer:The view expressed here by our readers are not necessarily shared by Arabian Business, its employees, sponsors or its advertisers.

NOTE: Comments posted on may be printed in the magazine Arabian Business

Please post responsibly. Commenter Rules

  • No comments yet, be the first!

All comments are subject to approval before appearing

Further reading

Features & Analysis
Danger zone: what would the wider impact of a slowdown in China have on the Gulf?

Danger zone: what would the wider impact of a slowdown in China have on the Gulf?

Last week’s stock market crash in China sent shockwaves through...

Blood on the bourse floor

Blood on the bourse floor

Arabtec’s share price collapse was the catalyst for a huge sell...

Taking stock

Taking stock

Gulf stock markets have seen a dearth of IPOs since the global...

Most Discussed