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Firms take steps to tackle credit crisis

Major companies in the UAE are trying to raise cash from investors as they struggle to get funds from banks because of the global credit crunch.

  • Gulf News Report
  • Published: 23:36 December 22, 2008
  • Gulf News

Dubai: Major companies in the UAE are trying to raise cash from investors as they struggle to get funds from banks because of the global credit crunch.

Dubai-based property developer Union Properties said Monday that it wanted to issue up to Dh2.5 billion of convertible bonds, as securing project financing from banks had become difficult during the financial crisis. Convertible bonds allow investors who have lent money to companies to change the debt into shares in the business.

Also, Shuaa Capital, a leading regional investment bank said on Monday it would seek shareholder approval next month to extend the maturity of its convertible bonds.

Tool to get money

"The signal is that they need cash. Banks will not give you cash now or they will do it with too many conditions. Selling bonds is a tool to get money and the strategic investor is entitled to an interest dividend of 6 or 7 per cent," said Hamood Abdullah Al Yasi, general manager at Emirates International Securities on Monday.

But there are signs that banks may start lending to companies again. Chris O'Donnell, CEO of government-owned property developer Nakheel, said on Monday that "the banking system is starting to free up and I think you'll find in 2009 we will see a lot more liquidity coming into the market".

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