Aldar yesterday revealed a funding framework with the Abu Dhabi Government including the sale of properties and the issuance of a bond.
The company will sell to the Government Dh10.9 billion (US$2.96bn) of infrastructure assets on Yas Island, including the Ferrari World theme park, along with Dh5.5bn of residential units and land. It will also issue a Dh2.8bn convertible bond to Mubadala Development.
Ahmed Ali al Sayegh, the chairman of Aldar, said the financial framework would "strengthen our capital structure and provide us with a stable and sustainable platform from which we can continue to capture commercial opportunities to deliver value to shareholders."
Mubadala, a strategic investment company owned by the Abu Dhabi Government and a major shareholder of Aldar, said: "Mubadala can confirm that, pending Aldar shareholder approval, it has agreed to purchase a convertible bond that will be issued by Aldar. As an existing major shareholder of Aldar, Mubadala believes that helping to bolster the company's capital structure will help Aldar position itself for long-term, sustainable growth."
The Abu Dhabi Department of Finance said the agreement to buy certain Aldar assets would add value to the Abu Dhabi economy.
"This purchase is consistent with past practice whereby the government has paid private companies for the construction of projects that are important for the development of Abu Dhabi's economy," the department said in a statement.
"This purchase does not signal a change of government policy towards Aldar, nor towards any other commercial enterprise. Government policy remains that broad and ongoing support will be offered exclusively to Mubadala, IPIC, TDIC and Taqa."
Aldar also wrote down the value of its assets by Dh10.5bn to reflect the decline in property prices and low number of sales in the capital.
"The impairment recognition reflects the adverse conditions that have affected the real estate market but is an important step in allowing Aldar to achieve long-term sustainable growth," Mr al Sayegh said.
A convertible bond is a type of debt that can be paid back in cash or in shares, usually at a previously agreed price.
Aldar first mentioned that it had entered discussions with the Government in November after reporting a Dh731.2 million loss for the third quarter, compared with a profit of Dh270.1m in the same period the previous year.
In March, it sold its racing circuit, marina, yacht club and other infrastructure at its flagship Yas Marina to the Government for Dh9.1bn. Of this, Dh6.5bn was given in the form of a debt write-off and the rest is expected to be given in the form of cash over seven years, according to the company.
The company, founded in 2005, has become one of the most actively traded stocks on the Abu Dhabi Securities Exchange. Over the past two weeks, it has had some of its most active periods of trading. The stock closed up less than half a per cent yesterday at Dh2.27.
