Monday, Dec 19, 2011
--Emaar signs new AED3.6 billion financing facility
--Looks to lower cost of existing borrowings
--Funds to repay existing $300 million facility taken in 2010
By Tahani Karrar-Lewsley
Of ZAWYA DOW JONES
DUBAI(Zawya Dow Jones)--Dubai-based Emaar Properties (EMAAR.DFM) said Monday it has signed a new 3.6 billion U.A.E. dirham ($980 million) financing facility with a number of banks, as the builder of the world's tallest tower looks to lower the cost of its existing borrowings.
Emaar, in an emailed statement, said Dubai Islamic Bank PJSC, National Bank of Abu Dhabi and Standard Chartered Bank were mandated as lead arrangers and bookrunners for the new Islamic and conventional facility.
"As part of the overall debt management for the company, the drawdown of the facility will convert the company's debt maturity profile from short to longer term. This new facility will also assist in reducing the overall financing cost of Emaar due to the lower pricing achieved compared to existing borrowings," Emaar said.
Emaar joins a growing list of U.A.E.-based companies who have recently rushed to tap the credit markets, pleased about the current terms on offer and concerned that global economic conditions could deteriorate further and crimp future investor appetite and increase the cost of credit.
Of Emaar's total debt facility, 50% is repayable in a bullet repayment after five years and the rest is amortized over eight years, while pricing is set at benchmark plus 350 basis points and secured by The Dubai Mall, Emaar said. Initially the facility will be utilised to repay an existing $300 million facility taken out in 2010. Subsequent drawdowns will be made in 2012 as, and when, required.
"Emaar has again been amongst the first to raise an 8-year financing in the regional markets with the assistance of our core partner banks, which reflects the superior value Emaar has created for its stakeholders through its iconic developments," said Emaar Chairman Mohamed Alabbar.
Analysts welcomed Emaar's new financing pact, saying it shows that credit markets remain open for the developer and that it can pay off maturing debts through refinancing.
"Emaar has a short-term debt of around AED4 billion as of the third quarter and they needed more cash to finance their maturing debt to focus on their operations so this will help. This is decent as they have proven that they can refinance themselves," said Mostafa El-Maghraby, a senior financial analyst at Global Investment House.
Emaar shares closed trading Monday down 2.3% at AED2.56 in a broadly positive overall market.
-By Tahani Karrar-Lewsley, Dow Jones Newswires; +9714 446-1692; Tahani.Karrar@dowjones.com
Copyright (c) 2011 Dow Jones & Co.
(END) Dow Jones Newswires
19-12-11 1145GMT
