Dubai: Aabar Petroleum said yesterday it would launch a $350 million convertible Islamic bond, or sukuk, this month.
"The sukuk will have a four-year maturity and is expected to offer a fixed profit rate equal to the four-year US Dollar Swap rate around the time of pricing plus 1.25 per cent," a company statement said.
"In certain circumstances, and subject to shareholder approval for the issuance of additional capital by Aabar, the sukuk may be redeemable in the form of Aabar's ordinary shares."
Aabar said the sukuk is expected to be offered to investors through a private placement outside the United States "pursuant to Regulations of the United States Securities Act 1933".
The offering is expected to be made in certain markets in the Gulf Arab region, Europe and Asia.
Marketing of the Sukuk and bookbuilding is expected to begin tomorrow and is expected to close on or around June 14 the statement said, adding that Deutsche Bank would be the sole bookrunner as well as joint lead manager along with Abu Dhabi Commercial Bank.
Aabar which has said it intends to acquire firms in the oil and gas industry to add to its offshore and onshore rigs said last month it was set to complete its takeover of Singapore's Pearl Energy , after acquiring 97 per cent of its shares. Instead of interest, sukuk investors get regular payments based on profits from approved investments. Islamic banks have an asset base worth over $250 billion.
Last year, Dubai's Ports, Customs and Free Zone Corporation (PCFC) issued a $2.8 billion Islamic bond the first ever convertible Islamic bond, offering holders 30 per cent of the shares of government-owned PCFC's companies if they go public in the next three years.
