FGB converts bonds into shares

First Gulf Bank (FGB) (FILE)

Abu-Dhabi based First Gulf Bank (FGB) is to convert bonds worth Dh3.6 billion ($980.4 million) into shares earlier than scheduled, at a valuation significantly higher than the current share price. FGB, the UAE’s second biggest bank by market value, will list 125 million new shares on the Abu Dhabi bourse on Monday, February 21, after converting bonds issued in July 2008 at a price of Dh28.80 per share, a statement said.
 
Shares in FGB ended 3.6 per cent lower on Sunday, at Dh17.10.

The bank's share capital will be adjusted to Dh1.5 billion from Dh1.38 billion, the statement said.

"The board of directors and the management are confident of the bank's rising profitability," said Andre Sayegh, chief executive officer, in the statement.

"We are confident that as common shareholders, the bondholders will benefit from their investment in the bank's future growth over the years to come."

FGB issued the convertible bonds in 2008 to fund its growth. The banking system in the UAE is trying to recover from a sharp rise in provisioning and sluggish loan growth over the past two years as the global financial crisis hit profitability.

Earlier this month, FGB reported a record full-year profit of 3.42 billion dirhams but fourth-quarter net profit was largely flat.

In January, FGB sold five-year bonds worth 200 million Swiss francs ($211.8 million) with a coupon of three per cent after holding off on a benchmark $500 million bond citing volatile market conditions, at the end of 2010.

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