Aabar Investments will discuss the possibility of raising more debt at a board meeting tomorrow. Aabar would use the meeting to "consider refinancing opportunities for existing indebtedness ? and the company's future projects and investment opportunities", the company said in a statement to the Abu Dhabi Securities Exchange.
One possibility is that Aabar, an investment vehicle controlled by the Abu Dhabi Government, may consider increasing its recent US$800 million (Dh2.93 billion) loan to $2bn. The company last month obtained a three-year, $800m club loan for general corporate purposes. "Banks are working on upsizing the recent loan to $2bn that could be used for paying maturing loans and probably investments," Reuters quoted an unnamed banker as saying. The loan would be finalised "within weeks", another banker said.
National Bank of Abu Dhabi was the lead arranger of the original $800m loan. If Aabar does take on the loan, it will be the fourth time in seven months that the company has acquired additional financing. With a 9.1 per cent stake, Aabar is the largest shareholder in the German car maker Daimler. It also owns 32 per cent of the space tourism venture Virgin Galactic. According to Aabar's consolidated financial statement, the company had total financial liabilities of Dh15bn at the end of December. Of that, Dh10.7bn was raised to finance Aabar's stake in Daimler, with Dh4.4bn coming due this year. The rest is maturing in 2012.
Also last month, Aabar said it would raise Dh1.5bn by issuing convertible bonds to its majority shareholder International Petroleum Investment Company (IPIC). The issue was far smaller than the maximum amount mentioned earlier when Aabar said it planned to sell as much as Dh7.35bn of convertible debt for general corporate purposes. In addition, Aabar also raised a $1.6bn bridge loan in November, of which it had used only Dh2.2bn at the end of December. That loan is also due for full repayment this year, the financial report shows.
"Refinancing seems business as usual. Aabar has just raised debt and logically it will be used to refinance short-term obligations," said Ali Khan, the managing director and head of equities at the investment bank Arqaam Capital in Dubai. The market will be watching tomorrow's meeting closely for more details on which part of its debt Aabar is planning to refinance, and how it plans to use the funds.
Aabar shares declined 5.5 per cent yesterday to Dh1.72 in a broadly negative market. It has lost almost 16 per cent of its value this year. Aabar, which was set up in 2005 to invest in oil and natural gas, has diversified its portfolio since IPIC became its major shareholder with more than 71 per cent. Apart from its stake in Daimler, Aabar owns 75.1 per cent of the Brawn Formula One racing team and holds a 4 per cent stake in the US electric sports car manufacturer Tesla Motors.