Abu Dhabi: Tabreed, the Abu Dhabi-based district cooling company, yesterday said it has secured a Dh1.3-billion loan from Mubadala to help with its operating expenses this year after reporting a record loss of Dh1.1 billion in 2009.
Tabreed's stock nosedived after the announcement, closing 9.5 per cent lower at Dh0.57 on the Dubai Financial Market. Analysts had not expected the company to take an impairment charge of Dh1.2 billion, which Tab-reed said reflected "the long-term value of projects in light of the current difficult economic climate."
"The reality is the company needs financing and they have consumed all available debt resources," said Mustafa Al Maghraby, senior investment analyst at Prime Emirates.
Tabreed, also known as National Central Cooling Company, said the Mubadala loan would be available through the end of this year and "may be converted to long-term capital," meaning Mubadala could add to its existing 16.8 per cent stake in the company.
Tabreed is one of the largest district cooling companies in the region, specialising in providing residences and businesses with cooled water from centralised plants, which is then used to provide air conditioning at reduced costs to traditional methods.
In announcing its third-quarter results, including a profit of Dh71 million through the first nine months, the company gave no indication of the record impairment charge announced yesterday.
"The changes we have made in these difficult times are designed to better position Tabreed to deliver consistent returns for its shareholders over time," Tabreed CEO Sujit Parhar said in a statement.
"Completion of the recapitalisation of Tabreed will allow us to focus on growing our core business and safeguarding our quality assets. The short-term financing from Mubadala will allow us to continue to operate through the recapitalisation programme," he said.
According to the company's statement yesterday, its board will call for a shareholders meeting in mid-April to vote on a recapitalisation plan which could include issuing more capital to strategic investors or through a public offering, or even a capital reduction.
"With regard to the recapitalisation programme, I lean more towards a private placement seeking both financial and strategic investors with Mubadala's participation a most likely scenario," Al Maghraby said.
Tabreed now owns and operates 62 district cooling plants in five Gulf countries and Jordan either directly or through partially-owned subsidiaries. The company has said it expects to bring online another 13 plants by the end of this year.