Tuesday, Jan 18, 2011

((This story was originally published Monday) 


   By Nour Malas 
   Of Zawya Dow Jones

ABU DHABI (Zawya Dow Jones)--Aldar Properties (ALDAR.AD) expects to return to profit by the end of 2011, after a $5.2 billion bailout from the Abu Dhabi government has ensured the company's "long-term future", even in the face of a slow property market recovery, Aldar's chief financial officer said Monday.

"In the coming year, you will see that the company will be in black at net profit level for 2011 and 2012 as well," Shafqat Malik told investors on a conference call. "We don't expect that the market will remain like this--there is a future," he added.

Aldar, Abu Dhabi's largest property developer by market value, has posted losses for four consecutive quarters and last year sold its prized Formula One race track to the government to help pay down debt.

Property prices in Abu Dhabi, the largest emirate in the U.A.E. and host to the world's sixth-largest crude oil reserves, have slumped about 30% from their peak two years ago as economic crisis gripped the region.

Under the terms of a funding plan announced last week, Aldar will this year get 70% to 75% of about AED19.1 billion, in cash, for assets sold to the government, and from the sale of a convertible bond to a government shareholder, Malik said. Aldar will receive the rest of the cash early next year, making a profit "in the early to mid teens" on its sale of the AED16.4 billion worth of land and assets to the government.

The cash injection will allow Aldar to repay AED13 billion of debt over the next three years, while the developer expects to keep between AED12 billion to AED14 billion of debt on its balance sheet, Malik said. Aldar aims to roll over between AED3.5 billion and AED5 billion of bilateral and bank debt this year, having already completed AED700 million of that, he added.

Aldar is talking to credit ratings agencies following the announcement, and doesn't expect them to come to "some position" before a month's time, Malik said. Aldar suffered a series of downgrades last year over concerns on how it would repay its debt and the extent of government support it would receive.

Malik Monday told investors the funding plan had put the company on stable ground, ruling out the need for further cash injections from the government or a possible privatization.

"There will not be [government cash injections]. The way we have done the whole thing is to give us a long term view," Malik said. "There is no intention or plan by the management or the board or the strategic shareholder to pursue a delisting."

Aldar shares closed Monday down 3.8% at AED2.06, following Sunday's 7.1% slide.

The developer's capital expenditure requirements for existing projects is around AED12 billion over the next three years, 70% of which will be spent on the investment side, Malik said. Between AED6 billion and AED7 billion of capex is required this year.

Aldar late last week announced a plan under the terms of which it would sell its Ferrari World theme park and associated infrastructure to the government for AED10.9 billion, an additional AED5.5 billion in land and units to the government, and place a AED2.8 billion bond with government-owned shareholder Mubadala Development Co.

Mubadala, which currently owns about 20% of Aldar, will own about 49% of the developer once that bond and a previous one are both converted by the end of 2011. Malik said there may be "a slight, small" coupon on the new convertible to Mubadala depending on the maturity date, which is likely to be December 2011. Terms of the bond are to be set at an extraordinary general meeting.

The funding plan also included a AED10.5 billion impairment charge, more than 50% of which relates to land valuation while the rest relates to scrapped projects, Malik said Monday. The charge was necessary "to give this company a long-term futureto give it prospect for a stable growth, rather than a 20%, 30%, 40% growth."

Aldar was "extreme" in its evaluation of investment properties and "looked hard at everything" and doesn't expect to have to log further impairment charges, Malik said.

-By Nour Malas, Dow Jones Newswires; +9715 0 2890223; nour.malas@dowjones.com

Copyright (c) 2011 Dow Jones & Company, Inc.

(END) Dow Jones Newswires

18-01-11 0316GMT