Aldar to sell Ferrari World to pay down debts
Theme park, assets and convertible bond to boost company's capital
Aldar Properties is to sell Ferrari World, its car-themed amusement park, to the government less than three months after it opened as it seeks to pay down its debts.
The commercial and residential property firm is to sell the theme park on Yas Island as well as the related roads, bridges and marine infrastructure for around AED 10.9 billion, along with around AED 5.5 billion in residential units. Mubadala Development Company, a state-owned investment company, will buy an AED 2.8 billion convertible bond from the company, according to the statement, originally highlighted last week.
The size of Aldar’s debts has become a growing issue for creditors and equity holders on the back of a fall in property values in the UAE capital and elsewhere. A report by Bank of America Merrill Lynch said the company would need around AED 10 billion just to “survive” the year.
Abu Dhabi’s biggest developer posted its biggest net loss for one quarter between July and September of AED 731.2 million against a net profit of just over AED270 million for the same period last year. The losses are part of an AED1.52 billion loss for the first nine months of 2010, against an AED1.4 billion gain last year. Nine month revenue fell 45% to AED932.4 million from the AED1.412 billion in 2009.
The company decided the measures in a board meeting last Thursday.
“The measures are focused on addressing current market conditions and on boosting the company’s capital structure,” said a statement to the Abu Dhabi stock exchange.
Ahmed Al Sayegh, chairman of Aldar, said: “The financial framework approved by the board today, including the convertible bond issue, will strengthen our capital structure and provide us with a stable and sustainable platform from which we can continue to capture commercial opportunities to deliver value to shareholders.
“The impairment recognition reflects the adverse conditions that have affected the real estate market, but is an important step in allowing Aldar to achieve long-term sustainable growth.”
The company added that the sale was in line with the usual policy of transferring strategic assets to the government upon completion of construction. The company's shares fell 3% opn Thursday to close at AED 2.27 per share.