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Wednesday, 24 June 2009

Deyaar’s Distressed Property Fund Raised 250 Million Dirhams

Deyaar Development PJSC, the property company that’s put a quarter of its projects in Dubai on hold, raised half of a 500 million-dirham ($136 million) fund to buy distressed properties.

The fund is “subscribed by a mix of local and overseas investors and would buy back distressed properties from Deyaar’s own portfolio,” Chief Executive Officer Markus Giebel said in an e-mailed statement in response to questions from Bloomberg. “The fund will also look at other properties with high expected returns.” The fund will close this year.

Dubai was hurt more by the global financial crisis than other property markets because of the construction boom that created thousands of new homes just as demand began to evaporate. Within a year, Dubai went from being the fastest rising of 46 markets monitored in the Knight Frank global house- price index to the second-biggest decliner after Latvia.

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BNP, Citi Have Biggest Part in $6.3 Billion Saudi Debt Workout

Saad Group company logoImage via Wikipedia

BNP Paribas SA and Citigroup Inc. provided a total 16 percent of the $6.3 billion of syndicated loans owed by Saudi billionaire Maan al-Sanea and the Algosaibi family, making them the most exposed to the country’s largest debt restructuring.

The banks top a list of 37 creditors that provided $5.6 billion to units of Saad Group, the construction and finance company whose owner al-Sanea has had accounts frozen, according to a document provided by one lender that shows the breakdown for the first time. Paris-based BNP, France’s largest bank, loaned about $475 million to Saad Group and $47.5 million to Ahmad Hamad Algosaibi & Brothers Co., whose bank unit is in default. Citigroup in New York loaned $500 million to Saad.

Banks that provided at least $64 billion to Saudi borrowers in the past five years as record oil prices spurred growth for the world’s biggest crude exporter now risk losses because the country’s first recession in a decade is threatening the wealth of some of the most powerful families. Al-Sanea, ranked No. 62 among the world’s richest people by Forbes in March, with an estimated net worth of $7 billion, married into the Algosaibi family, whose businesses span banking to beverages.

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Al Habtoor Plans to Raise Barclays Stake to 2.5%

Al Habtoor Group LLC, an owner of hotels in Dubai and Beirut, plans to increase its holding in Barclays Plc to as much as 2.5 percent on a bet that U.K. banks will bring better returns than real estate, its chairman said.

“We have a good stake in the bank and we intend to raise it” to “about 2 percent or 2.5 percent,” Khalaf Al Habtoor said in a phone interview from London late yesterday. “The price is very attractive” and “we have confidence in the bank’s strength and the U.K.’s regulatory system,” he said.

Al Habtoor has set aside as much as $400 million for investments and acquisitions this year and may borrow to add to the amount, Al Habtoor said. The Dubai-based company currently owns 1.4 percent of Barclays, the U.K.’s third-largest bank. The shares closed at 259.05 pence valuing a 1.1 percent stake at 239 million pounds ($394 million) on June 23. Barclays shares jumped 2.5 percent 265.6 pence at 9:19 a.m. in London.

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Abu Dhabi’s TDIC Plans 5-Year Benchmark Dollar Bond, Banker Says

Tourism Development & Investment Co., a state-owned developer of hotels in the emirate of Abu Dhabi, plans to offer five-year benchmark bonds to fund its projects, a banker familiar with the transaction said.

The U.S. dollar bond may be priced to yield 400 basis points over the similar maturity U.S. Treasuries, said the banker, who declined to be identified because the deal is private.

The bond was rated Aa2 by Moody’s Investors Service yesterday as the developer aims to raise a total of $3 billion.

Tourism Development’s unit TDIC Finance Ltd., a Cayman Island-based company, plans to issue the notes, Moody’s said. An Aa2 rating is the third-highest investment grade score.END

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Dubai Group raises heat on Shuaa Cap

Sheikh Mohammed bin Rashid Al Maktoum, Prime M...Image via Wikipedia

A Dubai investment vehicle yesterday said it would start legal action to reclaim Dh1.5bn ($408m) from Shuaa Capital as part of a disputed convertible bond.

Dubai Group, a member of the Dubai Holding conglomerate owned by Sheikh Mohammed bin Rashid Al Maktoum, the ruler, said it had appointed lawyers and would soon file a civil case at the Dubai courts.

The move towards legal action ratchets up pressure on Shuaa Capital, which sold Dh1.5bn in convertible bonds to Dubai Banking Group at the height of the boom in October 2007.

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Saudi Basic Industries Corporation (SABIC) - Result Update - June 2009 (PDF)

In 2008, Saudi Basic Industries Corporation (SABIC) achieved a growth of 20.8% in sales revenue while the profitability of the Company has declined by 18.5% to SR22.0bn. The Company’s profitability was severely dented during 4Q2008, because of economic slowdown and financial crisis. Consequently, the sector has experienced a massive fall in the prices of petrochemical products and lower demand. The major reason for lower prices during 4Q2008 was the fall in average crude oil prices in 4Q2008. Moreover, crude oil prices during 1Q2009 remained under pressure and led us to revise down our average crude oil price range from our initial forecast of US$75-US$80 per barrel to US$60-US$65 per barrel. In the wake of massive fall in demand of petrochemical products, we have revised down the Company’s capacity utilization in the range of 70%-75%, during 2009. However, the expected economic and financial recovery in late 2010 will lead the Company to improve its capacity utilization in the range of 85%-90%, during 2011-12. SABIC is still committed to make expansions in its existing capacities. Based on the given plans, the Company’s expansion projects are expected to make addition of 14.2mn tons to reach 69.7mn tons (petrochemical, fertilizer and metal) in 2012.

Our consolidated value for the stock worked out to be SR75.6, which offers a potential upside of 11.5% to the market price of SR67.8 as on 22nd June 2009. We, therefore, maintain our ‘BUY’ recommendation for the stock.

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Sheikh Mohammed reviews bilateral ties with Putin

General Sheikh Mohammed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE?Armed Forces, was yesterday received by Russian Prime Minister Vladimir Putin at the government headquarters in Kaluga in central Russia.

They reviewed bilateral relations and ways of boosting co-operation, particularly in economic and investment sectors. They also discussed ways to increase the exchange of information and high technologies.

Sheikh Mohammed praised the friendly relations between the UAE and Russia and the progress they constantly witness.

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Amlak expecting cash 'soon'

Amlak Finance, which faces a liquidity gap of more than Dh12 billion as per the contractual asset-liability mismatch calculated for the three-month period ending June 30, 2009, hopes to resolve this soon, according to the company's chief executive.

"Discussions directly with banks as well as through the Merger Steering Committee on a long-term sustainable funding plan for Amlak are on and we expect the results will be announced soon by the government," said CEO Arif Alharmi in response to queries on how the company was planning to address this gap.

Meanwhile, in another development, the media office of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai last night issued a statement relieving Amlak's Chairman Nasser Al Sheikh of all his government positions.

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Nasser Al Shaikh relieved of all posts

Nasser Al Shaikh has been relieved of all his posts, including his post as assistant to the director of the Ruler's Court for Foreign Affairs.

The announcement was made by the Media Office of His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai.

Earlier this week, Nasser Al Shaikh resigned from his position as chairman of Deyaar Development, just weeks after being replaced as head of Dubai's Finance Department.

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Libya to investigate Canadian oil firm

* (en) Libya Location * (he) מיקום לובImage via Wikipedia

Libyan authorities are investigating allegations that a small Canadian oil company was improperly pre-qualified to bid for exploration rights in the North African country, tactics that seem aimed at nationalising the company’s Libyan assets.

The investigation could undermine the legal basis for Verenex Energy to operate in Libya just as the company had attracted a takeover offer from a Chinese state-owned oil company, and could potentially enable Tripoli to seize the company’s assets cheaply. In a statement on its website, Verenex, which is the smallest foreign company with exploration rights in Libya, said it still had not received consent from Libya’s National Oil Corporation (NOC) for the proposed C$499 million (Dh1.59 billion) takeover by China National Petroleum Corporation (CNPC), despite agreeing to pay a C$46.7m “approval bonus” to expedite clearance for the deal.

It also disclosed the existence of the Libyan investigation, saying it considered the allegations were “without merit”. “The allegations are being made more than four years after the award of exploration rights under a transparent bid process and coincident with a request for consent for the sale of the company,” Verenex said.
Over the past four years, Verenex has made a string of oil and gas discoveries in Libya, giving the company more than two billion barrels of oil reserves.

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Dolphin in talks to acquire Qatar gas

The Abu Dhabi company Dolphin Energy is in talks with Qatar Petroleum to boost its gas imports from Qatar.

Dolphin, controlled by the government-owned Mubadala Development, said it could receive an additional 300 million to 500 million cubic feet a day (cfd) of gas on an “interruptible basis”, meaning it would not have a firm contract from Qatar Petroleum for the gas supplies, and would get the gas only when other international customers did not want their full allotted volumes.

Some of the gas would be available only on a seasonal basis, it added.
But that season is likely to be summer, when gas demand peaks in the Gulf but falls in the Asia Pacific and European countries that buy most of Qatar’s gas.

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Suspect funds on the rise

Suspected money laundering cases have risen by 10 per cent this year despite efforts by banks to introduce tougher international controls to curb the financial activities of criminal gangs.

More than 13,000 cases were reported last year and that figure is expected to rise this year based on new data released by regulatory authorities yesterday.

“It’s a positive sign that such activities are being picked up and people are coming to us,” said Saeed Abdullah al Hamiz, the senior executive director of the Central Bank’s supervision and examination department.

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Stocks fall after gloomy forecast

Dubai shares fell the most in more than seven months and Abu Dhabi’s benchmark index had its biggest drop since January Tuesday after the World Bank said the global recession would be deeper than expected.

Banking stocks led the declines with the Emirates NBD, the UAE’s largest lender, falling 4.6 per cent. The Dubai Islamic Bank (DIB) shed 6.5 per cent.

Property stocks also suffered major declines as Emaar Properties, the developer of the world’s tallest tower, lost 8.8 per cent.

“Declines were correlated to what has been happening in the global scene with regard to the price of oil and the tumbling of global stocks,” said Ayman el Saheb, the director of operations at Darahem Financial Brokerage.

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Increase in labour court cases

The number of cases heard in labour court over the past six months has almost tripled from the same period last year, officials say, reflecting the dour economic climate.

More than 2,658 cases have been filed with the court in the first half of this year, compared with 940 cases in the first half of 2008. Lawyers say they have seen a massive rise in cases as companies make redundant huge swathes of the workforce.

In the last quarter of 2008, an estimated 3,400 jobs were lost in Dubai, the majority of them in construction and property companies that had scaled down or cancelled projects.

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Ajman investors to file fraud case

A group of 20 property investors from Canada, the UK and Pakistan turned up in Dubai yesterday demanding a meeting with the Ajman developer Casamia Star, which they claim has failed to update them on their investments.

The group said they had bought properties in Frankfurt Residence, a yet-to-be built tower in Ajman. Casamia’s general manager, Merzak Gaci, refused to meet the group as they had not made an appointment and they were “rude”. Mr Gaci called police. Two officers turned up but there were no arrests.

The investors then went to the Bur Dubai police station to file a complaint against the company. “The police told us to come back at 7.30 in the morning to file a case for fraud,” Mr Ghulam said.

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UAE's Aldar focuses on home market as crisis bites

Aldar Properties ALDR.AD, Abu Dhabi's top property developer by market value, will focus on projects in the emirate for the next five years, looking to weather the sharp downturn in its local market, Aldar's chief said.

"I think we've got at least the next nine months of continuing great caution and flat market performance here," Aldar Chief Executive John Bullough told the Reuters Global Real Estate Summit on Tuesday.

"And I think market-matching quality and location is going to be really critical factors for the next year."

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Dubai - one of the riskiest property markets

Over supply and population decline makes Dubai one of the riskiest property markets for investors, it is claimed.

As thousands of recently unemployed expats prepare to leave the emirate when the school terms ends next week the reality of the impact of the global recession will be felt, according to Saud Masud, an analyst at Swiss investment UBS.

'In my view Dubai's property risk profile appears to be one of the highest in the post war era and while one may debate the potential support factor from Abu Dhabi the fundamental oversupply and population dynamics risks are very much there,' he said.

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Saving CityCenter was no easy task (Analysis)

The $8.5 billion CityCenter, billed as the most expensive private commercial development in U.S. history, was a few hours from shutting operations on the morning of March 27.

Earlier that week, MGM Mirage was sued in Delaware by Dubai World, its 50-50 joint venture partner in the 76-acre Strip project.

MGM Mirage needed to make a $200 million equity payment -- half of which would be on behalf of Dubai World -- or else CityCenter was headed into bankruptcy. Building activity would be halted and some 8,500 construction workers would lose their jobs.

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