TDIC has Dh13bn outstanding debt

Abu Dhabi’s Tourism Development and Investment Company (TDIC) has more than Dh13.3bn in total outstanding debt as of December 31, 2010, of which government loans amount to nearly Dh2.8bn while the remaining Dh10.5bn is commercial debt.

According to the latest prospectus for $3bn bonds to be issued by the company, “[u]nder certain of its loan agreements, TDIC has agreed to limit its financial indebtedness to an aggregate amount not to exceed $7.5 billion.”

“TDIC’s total indebtedness was Dh13,312.6 million, consisting of Dh1,000 million of short-term commercial indebtedness, Dh9,524.8 million of long-term commercial indebtedness and Dh2,787.8 million of [Abu Dhabi] government  loans” as of end-2010, the bond prospectus said.

“All of TDIC’s total outstanding indebtedness was unsecured,” the document said, adding that the firm has an addition overdraft facility of Dh200 million, which was undrawn as end of last year.

With Dh13.3bn ($3.7bn) in current indebtedness, and assuming a fully subscribed and issued $3bn global medium term note programme, that would still leave TDIC, which is a developer of major tourism destinations including branches of the Guggenheim and Louvre museums in Abu Dhabi, with the flexibility of raising another $800m before reaching the agreed indebtedness limit.

“TDIC recognized revenue from its commercial projects of Dh347.2m, Dh235.1m and Dh435.6m for the financial years ended 31 December 2010, 2009 and 2008, respectively,” the company said in its prospectus, while acknowledging that adverse market conditions in the emirate’s real estate market has led to it slashing its costs this year.

“As a result of current market conditions in the Abu Dhabi real estate market, TDIC’s Board of Directors approved a strategy in December 2010 to reduce TDIC’s development costs through selectively hibernating, delaying or scaling-back certain projects,” it said in the documents.

“This strategy has reduced TDIC’s total budgeted capital expenditure for 2011 from Dh18.6 billion to Dh13.4 billion,” or 28 per cent, it said.

“The projects affected generally comprise commercially funded projects that are in the concept and design stages. In some cases, including the Saadiyat Beach 20 and Saadiyat Beach 21 apartments and Saadiyat Marina Tower, amongst others, TDIC has chosen to complete projects’ designs before hibernating them,” it added.

“None of the projects currently being hibernated are at the construction stage. TDIC will continue to monitor market conditions in the Abu Dhabi real estate market closely in order to assess when to resume developing such projects,” it said.

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