Abu Dhabi's Aldar 'may get billions in state cash'
Government may offer long-term loan to ambitious developer
Aldar, the loss-hit Abu Dhabi developer, could receive a 25-year loan from the government worth tens of billions of dirhams, it has been reported.
UAE paper The National cited a senior government official as saying cash support could come in the form of a 25-year loan of tens of billions of dirhams that would be transferred to Aldar over three to four years.
Aldar, part-owned by the emirate’s government, has suffered losses for four quarters on poor sales, bad debt provision and tumbling real estate values.
The developer is expected to need AED9.8bn ($2.67bn) by 2011 if it is to survive, a report by Bank of America Merrill Lynch said earlier this week.
According to Cairo bank EFG Hermes, Aldar is estimated to have $3.81bn in debt maturing in 2011 and will face a funding gap of nearly $1.66bn until the end of next year.
Aldar announced it largest quarterly loss yet on Tuesday, of AED731m ($199m) for the June-September quarter, compared with a restated net profit of AED270.1m in the year-earlier period.
The company said Tuesday it was “in the final stages of discussions with the Abu Dhabi government regarding the company’s cash requirements and anticipates that a framework will be concluded before the end of Q4 2010.”
Bank of America Merrill Lynch said it was skeptical about the terms of a new financing solution. “Aldar could surprise on the upside if it received an explicit sovereign guaranteed issuance in the current easier credit market. Issue size would be critical to share price performance,” it said in the report.