Government may boost stake in Aldar

Property firm considers new convertible bonds and asset sale

Aldar completed Ferrari World last year, though sold some Yas Island assets.
Aldar completed Ferrari World last year, though sold some Yas Island assets.

Aldar Properties may issue a fresh round of convertible bonds and allow Mubadala Development Company to increase its equity stake via the conversion of previously issued bonds.

Abu Dhabi’s biggest property developer announced the options to the stock exchange ahead of its board meeting scheduled tomorrow. The company’s shares fell more than 4.5% yesterday to close at AED2.29 – close to its price at the start of December and down from AED2.66 on 25th October 2010.

The company will discuss whether to hold an extraordinary general meeting with shareholders over the latest potential issuance, along with the sale of some assets and increasing the stake of Mubadala, a state-backed investment company, from convertibles issued in 2008.

The move increases the concerns around the funding requirement of Aldar Properties, which has embarked on an extensive programme of commercial and residential projects around the UAE capital. Aldar reported a net loss of AED 1.52 billion for the first nine months of 2010, compared to a net profit of AED1.41 billion for the same period the previous year. Around AED10 billion of debt is scheduled to mature this year.

The developer said in March that it sold assets on Yas Island - including the racing circuit, marina and yacht club - to the government for AED9.14 billion. Last year it completed the development of Ferrari World on the island, a themed amusement park based on the famous car manufacturer and auto racing enterprise.

A report by Bank of America Merrill Lynch last November found that Aldar would need AED9.8 billion dirhams by this year to “survive” as the property market recovers.

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