The Abu Dhabi National Energy Company (Taqa) said yesterday it would borrow $4.5 billion (Dh16.5 billion) to fund an aggressive investment drive that could lift its assets to $60bn and turn it into one of the world's major energy investment players.
The government-controlled company, already one of the largest oil investment firms in the Middle East, said the loans would include $1.5bn in bonds and $3bn in direct credits from banks and other financial institutions.
In a letter to the Abu Dhabi Securities Exchange, where Taqa and 60 other companies are listed, it said the bonds were in two batches, including $1bn, with a maturity interest rate of 6.6 per cent and $500m for 7.25 per cent.
"Taqa has completed the issuance of $1bn 6.6 per cent senior notes due on August 2013 and $500m of 7.25 per cent senior notes due in August 2018," it said.
"The interest payment dates on the notes are February 1 and August 1, with first interest payments commencing in February 2009.
"The proceeds of the offering, net of applicable expenses, will be used to repay borrowings under our credit agreement and for general corporate purposes," the letter said. It said the company is in the process of finalising a $3bn three-year revolving credit facility, adding there are no additional financing plans at present.
Experts said Taqa is taking advantage of low interest rates to seek funds for its expansion programmes which include acquisitions of key companies abroad.
One expert said Taqa decided to seek direct credits from banks and at the same time issue bonds for the sake of funding diversification and reduction of risks.
"Taqa is taking advantage of the decline in interest rates to get funds for its expansion strategy outside the UAE," said Karim Helmi, an economist at the Abu Dhabi-based Emirates Securities Company, one of the leading stocks consultants in the UAE.
Taqa is trying to diversify its funding sources and lessen risks by breaking the source of funding into bonds and direct credits," he said.
"I believe Taqa found it a good opportunity now to borrow to finance its operations. I think it is a good decision to diversify its borrowing sources," he said.
The move followed a decision by Taqa last month to double its capital to more than Dh8 billion through the planned issuance of Dh4.15 billion in convertible bonds to shareholders and investors outside the company.
Taqa, which is 75 per cent owned by the Abu Dhabi government, issued nearly $2 bn in bonds last year to finance its acquisition drive, which has boosted its assets over the past five years.
The latest major investment last month involved the purchase of six offshore oilfields in the North Sea under a Sale and Purchase Agreement with Shell UK Ltd and Esso Exploration and Production UK.
The deal added nearly 40,000 barrels of oil equivalent (boe) to Taqa's existing energy reserves.
The deal followed an announcement by Taqa in June that it had acquired 50 per cent of Compagnie Eolienne du Détroit (CED), which is controlled by the Paris-based Theolia, a leading European renewable energy company.
Another deal with Theolia involved the creation of a consortium of these two prequalified companies to respond jointly to the international invitation to tender for the construction and operation of a 300 MW wind farm located in Morocco.
Announcing its financial results for 2007 early this year, Taqa said its revenues jumped by 72 per cent to a record Dh8.3bn, while net earnings shot up by 113 per cent to more than Dh1bn.
Net profits for the first quarter of 2008 also leaped by 525 per cent to Dh398m from Dh64m in the same period of 2007.
Company officials said they expected another record year in 2008 following the completion of acquisition transactions finalised over the past year.
The company has set a target to boost its assets to $60bn become a key player in the global energy industry.
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