Looking after its own

18 January 2011 By Una Galani Follow @ugalani

With its $5.2 bln lifeline, the emirate is ensuring that creditors to the favourite vehicle for glitzy projects such as the Ferrari theme park don’t suffer. The contrast with the restructuring of Nakheel, which is responsible for Dubai’s palm frond islands, is stark.

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Abu Dhabi property developer Aldar said on Jan. 17 that it will make a profit in the "midtolate teens" on $4.5 billion of assets that it is selling to the Abu Dhabi government. It didn't spell out exactly what it meant by this. The assets being sold include the Ferrari theme park.

The company will also place a convertible bond worth $760 million with Mubadala Development Company, a whollyowned government investment vehicle. The bond will convert into equity, probably in December 2011, at a strike price of 2.30 dirhams per share.

Aldar will also book a $2.9 billion impairment charge on assets it is keeping on its balance sheet to reflect reduced land values and scrapped projects.

In March, Aldar sold its Formula One race track and other assets to the Abu Dhabi government for $2.5 billion.

The Abu Dhabi government owns roughly 30 percent of the property developer through various entities. Following the conversion of the bond, Aldar will be majority owned by the government.

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