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Fri 30 Mar 2012 09:30 AM

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Mubadala eyes Aldar stake for bank loan deal

Investment fund set to transfer 14% stake in developer to Abu Dhabi Commercial Bank

Mubadala eyes Aldar stake for bank loan deal

Investment fund Mubadala Development Co will transfer a 14 percent stake in Aldar Properties to Abu Dhabi Commercial Bank in return for a loan facility.

Mubadala, which owns 49 percent of the struggling developer after an Abu Dhabi government bailout, said the shares - totalling 571.9 million - will revert back to it in April 2013 when the facility matures, or earlier if repaid ahead of schedule.

The two firms did not disclose the size of the facility. At Thursday's Aldar closing share price of 1.22 dirhams, the stake is worth nearly AED700m ($190.58m)

Reuters reported in January that Abu Dhabi has held talks to offload all or part of the 49-percent government stake in struggling Aldar in an attempt to stop its falling asset value from dragging down Mubadala.

Mubadala, which unveiled plans to buy a $2bn stake in Brazil's EBX Group earlier this week, took part in a government rescue of Aldar last year by subscribing to a $2.8bn convertible bond issued by the developer in March 2011.

Mubadala, with assets worth around $46bn, converted a portion of the bond to equity in December. Full conversion could eventually raise Mubadala's stake to 60 percent.

"It appears as though Mubadala is taking all necessary steps to avoid raising its ownership in Aldar," said a regional fixed income analyst speaking on condition of anonymity.

"For ADCB, this is a high quality loan to Mubadala secured with collateral, Aldar, so basically it is balance sheet growth for the bank."

The Abu Dhabi government has given Aldar nearly $10 billion in bailout funds, almost equivalent to the amount it extended to neighbouring emirate Dubai at the height of its 2009 debt crisis.

While Dubai's crisis came as a shock to global markets, the Abu Dhabi reckoning has been a more gradual and incremental process as real estate values continue to slide in the emirate.

Earlier this month, Aldar and local rival Sorouh Real Estate said they were in talks for a state-backed merger that could create a company worth some $15 billion in assets.

A decision on the tie-up will be made within three months, they said at the time.

"This facility is part of Mubadala's ongoing financing strategy, enabling a source of funding on commercially viable terms while maintaining Mubadala as a long-term shareholder of Aldar," the statement said.

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