Mubadala helps Tabreed seal deal

District cooling firm Tabreed reached a deal with creditors to refinance Dh2.63 billion ($716 million) in debt, with state-owned fund Mubadala stepping up again with financial aid.

Investment vehicle Mubadala, which owns a 16.7 per cent stake, will pump in an additional Dh400 million in the form of a bridge loan that will help Tabreed complete its recapitalisation and avoid a liquidity crunch.
 
The bridge loan will be in the form of an amendment to the current Dh1.3 billion loan the fund has provided, Tabreed said in a statement on Thursday.

"The main hang for the stock was the risk of insolvency and equity dilution. With those being resolved, we expect investors to revisit the story," said Tariq Qaqish, a fund manager at Dubai-based Al Mal Capital.

Dubai-listed Tabreed, also known as the National Cooling Co, is among a number of Gulf companies restructuring debt after an economic boom, fuelled by record-high oil prices and easy credit, ended abruptly and caused a property market crash.

The cooling firm also secured a new Dh150 million revolving credit facility from its lenders.

"The approval of the terms of the refinancing by our bank lenders is a decisive step towards the successful recapitalisation of Tabreed," Khaled Al Qubaisi, Tabreed's managing director, said in the statement.

However, Tabreed's statement did not provide further details on the terms of the restructuring or clarity on the repayment of a Dh1.7 billion convertible Islamic bond due in May.

"The problem is not operational. It's a cash-generating company and contracts are long term. It is restructuring," said Jessica Estefane, an analyst at Shuaa Capital.

"What's going to happen? Will the Mubadala loan be converted into equity? This is the risk for shareholders."

KEY ROLE

The move highlights the growing importance of Mubadala, a fully owned Abu Dhabi entity.

"The role of Mubadala has been extremely important since the crisis. It is the vehicle by which we have seen troubled government-related entities helped out," Mohammed Yasin, chief investment officer of CAPM Investment in Abu Dhabi, said.

Last month, it supported the bailout plan for debt-laden Aldar Properties.

Tabreed reported a net profit of Dh21.1 million ($5.74 million) for the fourth quarter, compared with a loss of Dh1.17 billion a year earlier, Reuters calculations show.

Reuters calculated the quarterly profit numbers from the company's previous financial statements.
Tabreed had a net profit of Dh136.8 million for the full year on revenue of Dh1.02 billion, it said in a separate statement to Dubai bourse.

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