Tabreed's board proposes AED1.7bn ($463m) convertible bond issue with more aid from state-owned Mubadala
UAE's Tabreed has secured an extra AED3.1bn
($844.2m) lifeline from state-owned fund Mubadala, helping the industrial
cooling firm to tackle its massive debt pile.
Tabreed will issue AED1.7bn ($463m) of subordinated mandatory convertible
notes to Mubadala to refinance Tabreed's existing bridge loan with the fund of
the same amount. These are priced at AED1.13 and mature in 2019
Tabreed will also get a AED1.4bn loan facility from the investment fund that
matures on December 2012.
Tabreed's shares fell 8.1 percent at 0900 GMT on the announcement on
Wednesday. The broader Dubai index DFM dropped 3.1 percent on worries of
spreading political unrest in the region.
Tabreed, also known as the National Cooling Co, one of a number of Gulf
companies restructuring debts after the end of the region's economic boom.
Chief Financial Officer Stephen Ridlington said in a conference call that it
was not clear how much of new loan Tabreed would use.
"Ultimate amount of funding we will require is uncertain," said
Ridlington, who said the company had more than sufficient funds to meet
requirements until the end of 2012.
Mubadala, wholly-owned by the oil-rich Abu Dhabi government, has stakes in
Advanced Micro Devices Inc and Ferrari, as well as General Electric and private
equity firm Carlyle. It helped out Abu Dhabi developer Aldar Properties in
January with a $5.2bn support.
Tabreed last month reached a deal with banks to refinance AED2.63bn in debt.
"It's an 8-year facility, in tranches, but a single facility with an
Libor margin of around 2 percent," said Ridlington.
The company expects to close the recapitalisation programme by March 31.
"The management's focus will be on completing Tabreed's build-out
program, developing the company's core chilled water business, and increasing
profitability," said Khaled Al Qubaisi, Tabreed's managing director.
Al Qubaisi said later at a conference in Abu Dhabi that the firm had no need
to sell any of its assets.
Dubai-listed Tabreed has a AED1.7bn convertible Islamic bond due in May. The
firm has asked holders of the bond to tender certificates for repurchase.
The Islamic bond is mandatorily convertible into shares and will be repaid
through issuing shares.
Tabreed is also asking shareholders to accept shares instead of cash for a
pending coupon payment of AED246.5m.
The company said it had no plans to tap the capital markets soon.
Ridlington said Tabreed was very focused on cost management but has no plans
for staff cuts or management changes. ($1=AED3.672)