Bloomberg News

Aldar Converts Mubadala-Held Bonds at Low End of Price Range

December 28, 2011

(Updates with closing share price in fourth paragraph.)

Dec. 15 (Bloomberg) -- Aldar Properties PJSC will convert bonds into shares at the lower end of their price range as Abu Dhabi’s biggest real-estate company grapples with tumbling property prices and declining market value. The shares dropped.

Aldar will today convert 2.1 billion dirhams worth of bonds held by Mubadala Development Co., an investor with stakes in Carlyle Group and General Electric Co., into shares of 1.75 dirhams each, the company said in a statement to the Abu Dhabi bourse today. The original conversion terms stipulated that the bonds would be converted at not higher than 2.30 dirhams and not lower than 1.75 dirhams.

Property values and rents slumped in the United Arab Emirates after banks curtailed lending and speculators pulled out due to the global credit crunch. Home prices in Abu Dhabi, the U.A.E. capital, may drop 30 percent more after declining as much as 55 percent from the market’s peak in mid-2008, according to Dubai-based Rasmala Investment Bank Ltd.

Aldar shares dropped 4.2 percent to a record-low of 92 fils at the 2 p.m. close in Abu Dhabi. The stock has plunged 60 percent this year compared with an 11 percent decline for the benchmark ADX General Index. The company’s market value has slumped to 2.65 billion dirhams this year compared with 26.9 billion dirhams at the end of 2007, according to data compiled by Bloomberg.

Aldar in January agreed to sell assets including a Ferrari theme park and convertible bonds to Abu Dhabi’s government for 19.2 billion dirhams to pay creditors. The company reported its first profit in 15 months in the first quarter of this year as it delivered more homes to buyers.

Sorouh Real Estate PJSC, Abu Dhabi’s second-biggest developer by market value, declined to a record-low of 87 fils. The stock has lost 47 percent this year.

--Editors: Riad Hamade, Daliah Merzaban

To contact the reporter on this story: Shaji Mathew in Dubai at shajimathew@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net


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