Tabreed, the Middle East's leading district cooling company, will soon launch a major strategic revision to its existing business structure focusing on significant increase in profitability.
Tabreed will form a new assets holding company into which existing assets will be transferred at a fair market value. "We are pleased to announce that there is a new emphasis on profitability and shareholder returns. The new business model will allow Tabreed to fund its growth while providing increased shareholder value," said Chairman Khadem Al Qubaisi in a statement.
"With the formation of a new holding company, Tabreed will remain the manager and operator of the transferred assets," he added.
The company's board approved the major plan after commissioning a major study by Booz and Company.
The study has resulted in several strategies that will enable Tabreed to reduce long-term debt, avoid raising additional shareholder equity and increase the return on equity going forward.
"Through this new business model, we are now more focused on increasing the investments of our shareholders and improving the company's profits.
"Tabreed is always in the process of a continued corporate evolution maturing into a more responsive as well as progressive public company," Al Qubaisi said.
Tabreed, now in its 10th year of operation, has recently launched a Shariah-compliant offering mandatory convertible trust certificates, which will be exchangeable into ordinary shares of Tabreed at maturity.
The company offered the certificates to investors in the Middle East as well as other jurisdictions including Europe and Asia.
Tabreed, one of the leading suppliers of district cooling services in the UAE, designs, engineers, finances, constructs and operates district cooling facilities that supply chilled water for air-conditioning.
The company has expanded its district cooling operations by establishing subsidiaries and associate companies in Qatar, Bahrain, Jordan, Oman, Saudi Arabia and Kuwait. It has also developed a number of subsidiary companies which service the district cooling and air conditioning industry.
The company currently operates 31 district cooling plants (of which it wholly owns 22) in the UAE from which it sells chilled water air-conditioning services to customers that are connected to the relevant distribution network.
Tabreed's current authorised and issued share capital is Dh1.21 billion. Tabreed is listed on the Dubai Financial Market and has a wide shareholder base.
Its shareholders include government bodies and investment institutions, private offices of high net worth individuals, overseas investors and the public. The stock closed 1.63 per cent lower at Dh2.41 yesterday.
Tabreed and its subsidiaries own 227 Kton of capacity in the GCC region, of which 220 Kton is in the UAE and seven Kton is in Bahrain. It operates further 97 Kton through associates, of which 67 Kton is in the UAE and 30 Kton is in Qatar.
Based on existing arrangements, Tabreed has in the GCC a 722 Kton pipeline of projects under construction/development and a 473 Kton pipeline of potential new projects, expected to be installed by the end of 2010.