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Friday, 8 January 2010

Aabar offers to buy 70 pct of Dubai's Arabtec, UAE Investment Companies, Banking & Investment - Maktoob Business

Abu-Dhabi based Aabar Investments has offered to acquire 70 percent of Dubai-based construction firm Arabtec through convertible bonds, Aabar said in a statement on its website.

"The Board of Aabar has resolved to make an offer to Arabtec to acquire 70 percent of the share capital of Arabtec by way of a mandatory convertible bond to be issued by Arabtec Holding to Aabar Investments at a conversion price of 2.3 dirhams ($0.626) per share," Aabar said in the statement.

The Trade of the Century

When you think about hot commodities right now, you probably don't
think of water. Yet the price of water in some parts of the world is
rising...sometimes very quickly. Take California, for example.

Mark Swatek is CEO of Southwest Water Co., a water utility that serves
California and the Southwestern US. You may accuse him of talking his
book when he says: "One of the fastest growing commodity prices is the
price of metropolitan water [in Southern California]."

It may be an exaggeration, but not by much. Since 2007, the
Metropolitan Water District of Southern California has increased its
water rates from $574 an acre-foot to $781 an acre-foot - a 36%
increase. (An acre-foot is the amount of water needed to flood a plain
of one acre to a depth of one foot - or about 326,000 gallons.)

Dubai to ease hold on utilities - The National Newspaper

The Dubai Government has opened the door to private investment in its electricity and water sector for the first time as it contemplates a slate of costly expansion projects.

The Dubai Electricity and Water Authority (DEWA) posted a notice on its website last week seeking bidders for a consultancy contract to manage the launch of the emirate’s first independent water and power project (IWPP). The utility, a fully government-owned entity, has retained full ownership of all its power stations in recent years even as neighbours such as Abu Dhabi and Oman welcomed private companies to invest in their plants.

DEWA officials did not respond to a request for comment, but experts said the opening to the private sector appeared to be driven by the utility’s long-term investment requirements.

Abu Dhabi chips out of rough - The National Newspaper

There have been times when Abu Dhabi’s foray into the semiconductor industry looked like a bad idea.

When the state-owned Mubadala Development doubled its stake in the US chip maker Advanced Micro Devices (AMD), the stock fell continuously for months, reaching a low last January when the price Mubadala paid for a 20 per cent stake could have bought it a majority.

Meanwhile, another Abu Dhabi Government fund was ploughing billions into Globalfoundries, a joint venture with AMD that would compete with the semiconductor giants of Taiwan and South Korea. Many analysts questioned whether it could.

Globalfoundries signs up Qualcomm - The National Newspaper

Globalfoundries, the Abu Dhabi-owned microchip maker, has signed a deal with the mobile chip maker Qualcomm, its biggest customer to date.

The contract is a significant step in Globalfoundries’s push to become a major force in the semiconductor industry. Qualcomm is the largest global chip maker to rely entirely on outside manufacturers.

Abu Dhabi’s Advanced Technology Investment Company (ATIC) created Globalfoundries in a joint-venture with AMD, the Californian company that is the world’s second-largest maker of the microchips for personal computers.

UK firms see expansion potential in Qatar

UK companies with already established offices in Qatar see tremendous potential for expanding their businesses. Doha is seeing a growing number of UK firms choose to come to do business and invest.

The British Ambassador John Hawkins yesterday met a number of UK companies that have recently opened offices in Qatar at the British Embassy to discuss business opportunities and hear about their experiences.

The companies included Allies & Morrison, Chartered Institute of Buildings (CIOB), Bluu Qatar, Bradbrook Consulting, GallifordTry Qatar LLC, Turner & Townsend, and WSP Group.

A CRISIS WASTED….

The deception continues and the losers continue to win. We have now confirmed that Geithner made the banks whole on their AIG default swaps. If we had a government and an economy that actually punished those who made bad decisions (countries with such a system call this free market capitalism) we would have forced these companies to take their lumps. We would also fire Tim Geithner immediately. To make matters worse, we learn today that Fannie Mae is implementing loose lending policies that helped contribute to this housing crisis in the first place. Does anyone out there see what has changed in the last few years that shows we can avoid these debacles in the future? Thus far, it looks like nothing has changed.

How can you have a healthy capitalist system in which no one is punished for their mistakes and the losers never learn from their mishaps? We’ll find out over the course of the coming years. It sure looks to me like we have wasted a perfectly good crisis….

Dubai projects 16.9% budget deficit in 2010

The government of the financially troubled Dubai announced on Thursday a projected 2010 budget deficit its of six billion dirhams (1.63 billion dollars/1.13 billion euros), or 16.9 percent of expenditure.

Income is projected at 29.4 billion dirhams (8.01 billion dollars), a 12 percent drop from 9.1 billion, the head of the department of finance, Abdulrahman al-Saleh, said in a statement carried by WAM state news agency.

Spending is projected at 35.4 billion dirhams (9.63 billion dollars), down 6.5 percent from last year's 10.3 billion.

Dubai says metro on schedule, contracts being paid

Dubai's transit authority says work on the city's partially completed metro system is proceeding on schedule and contractors are being paid.

The statement Thursday comes in response to media reports saying that the project's Japanese-led consortium plans to delay work on the Arab Gulf's first rapid transit line because of a dispute over late payments.

Dubai opened part of the metro system in September, but only about a third of the initial line's stations are operational. The remaining stations on the 32-mile (52-kilometer) red line are due to open by February.

The emirate has said the metro's first two lines will cost $7.6 billion, about 80 percent more than originally planned.

TURKMENISTAN: IRANIAN PRESIDENT GUSHES ABOUT PIPELINE POTENTIAL

Iranian President Mahmoud Ahmadinejad is exuding hubris following a Central Asian tour that featured the opening of a second natural gas pipeline connecting Turkmenistan and Iran.

Ahmadinejad’s January 4-6 trip took him first to Tajikistan and then to Turkmenistan. Upon his return to Tehran, Ahmadinejad noted that both Central Asian nations were "determined" to increase cooperation with Iran.

"[Our] three countries and the three governments are determined to further enhance their ties in different spheres," the Fars news agency quoted Ahmadinejad as saying. "During the visit and talks with the Tajik president [Imomali Rahmon] we agreed on carrying out new projects, 150 Iranian companies are carrying out numerous engineering projects in Tajikistan and they are using Iranian technology and equipment."

Dubai World to request standstill through to end-April within next two weeks

This article is provided to FT.com readers by Debtwire—the most informed news service available for financial professionals in fixed income markets across the world. www.debtwire.com

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Dubai World is likely to ask its lenders for a standstill agreement within the next fortnight, two sources close to the situation told Debtwire. The investment vehicle’s standstill request is likely to run to end-April and interest will be paid throughout, they added.

Restructuring advisor Deloitte is working on business plans for the various Dubai World companies to be covered by the request, the two sources continued. Those plans will then be reviewed by lender advisor KPMG. Amortisation payments falling due during the standstill period may be rescheduled. The idea is to get legal changes in place and issue a plan for lenders in April, one of the sources said, adding that no repayment plans have been determined or outlined to lenders yet.

Dubai World met with creditors on 21 December to provide an update on the development of the group’s restructuring plans, as reported. Dubai World advisers Deloitte, Rothschild and Clifford Chance also attended the meeting. A week earlier, the Dubai government announced the creation of a new legal framework intended to govern any future formal reorganization and restructuring of Dubai World and any of its subsidiaries.

Rothschild and Deloitte are working on a Dubai World restructuring plan, while AlixPartners is undertaking valuation work, looking at the relative merits of building out and exploring how such moves could be financed, said the second source close to the situation. US advisory firm Moelis is advising the Dubai Government, the same source added.

The next major event will be the formal appointment of a Dubai World creditor committee, said a source familiar with the situation, adding the standstill request should be communicated through the committee rather than via another bank meeting. The committee is likely to comprise Abu Dhabi Commercial Bank, Emirates NBD, LloydsTSB, HSBC, Royal Bank of Scotland and Standard Chartered, as reported.

“As long as a standstill is successfully implemented, Dubai World has assurances that the Government of Dubai, through the DFSF [Dubai Financial Support Fund], will provide financial support to cover working capital and interest expenses to ensure the continuity of key projects,” said Dubai World in a statement following its 21 December creditor talks.

Lenders knew before that meeting started that Dubai World was not in a position to make a standstill request at the time, said the second source close to the situation.

Standstill scope

Dubai World announced at the end of November 2009 that it planned to seek a six-month standstill applying to companies with debts of around USD 26bn. The list of businesses that would be excluded from the debt restructuring included Infinity World Holding, Istithmar World and Ports & Free Zone World, which includes DP World, Economic Zones World, P&O Ferries and Jebel Ali Free Zone.

Dubai World later added that Drydocks World and its subsidiaries would also remain outside the process. The shipbuilding and repair company had been engaged in “constructive dialogue” with its lenders for several months and had sufficient financial capacity to service its debt, Dubai World said.

That means the standstill will apply to real estate developers Nakheel and Limitless, in addition to Dubai World’s own HoldCo debt.

Nakheel’s debt became the primary focus following Dubai World’s November announcement because its USD 8bn debt burden included a USD 3.52bn sukuk due on 14 December. Thanks to a last-minute USD 10bn loan from the Abu Dhabi government to the Dubai Financial Support Fund, Nakheel eventually managed to cover the scheduled redemption and around USD 600m of associated payments, as reported.

“Nakheel was a special case and that bond was a particular problem,” said the second source close to the situation. “It had the benefit of a guarantee from Dubai World, there was no framework in place to restructure the sukuk, [and a] bunch of other facilities would have also been affected, so on balance it was worthwhile repaying in full.”

Bank creditors owed USD 10bn-USD 11bn directly from Dubai World will likely be the focus of restructuring talks. The debt is split between a USD 5.5bn syndicated loan and several bilateral lines, sources previously told Debtwire. None of the four tranches that make up that USD 5.5bn syndicated loan mature before mid-2010, but there is a risk that the bilateral facilities could trigger a cross-default.

Dubai World’s USD 5.5bn facility is split between a USD 2.1bn two-year term loan, a USD 1.95bn three-year term loan, USD 1bn of five-year debt and a USD 450m three-year revolver. The bookrunners were Bank of Tokyo-Mitsubishi UFJ, Calyon, Emirates Bank, HSBC, ING, LloydsTSB, Mashreqbank, RBS and SMBC. The deal refinanced a USD 5bn one-year bridge facility used to fund Dubai World’s investment in MGM Mirage, conducted through a special purpose vehicle called Infinity World Holding.

DP World, the Dubai World ports business excluded from the restructuring, has already made interest or profit payments totaling more than USD 100m this month. The company said on 4 January that it had paid the USD 59.9m coupon on a USD 1.75bn bond due 2037 for the period from July 2009 to 31 December 2009. It also distributed profit for the same period on its USD 1.5bn sukuk due 2017. The profit rate on the sukuk is 6.25% and the amount distributed was USD 46.875m.

DP World also announced yesterday morning (6 January) that it will seek a “premium listing” on the London Stock Exchange while maintaining its existing primary listing on Nasdaq Dubai. The company plans to seek admission in the second quarter of 2010, it said in a statement.

Bahrain aims to make waves in Gulf container handling sector

From the top of its control tower, the ambitious scale of Bahrain's new Khalifa bin Salman Port becomes clear.

The site, on reclaimed land off the island of Muharraq, is 900,000 square metres. Its container handling capacity is almost 10 times the amount the Gulf state imports.

APM Terminals, the arm of Denmark's AP Moller-Maersk that runs the terminal, hopes to fill the spare capacity by becoming a hub port, handling containers going to and from other ports in the upper Gulf.

Dubai Metro plans hit by contract row

The completion of Dubai's newly opened Metro faces delays as the Japanese-led consortium building the flagship project slows work in a dispute over about $3bn worth of contract payments.

A spokesman for Obayashi Corporation, one of the five main contractors, said work on the remaining unopened stations would be slowed as a negotiating manoeuvre in payment talks with the government's transport authority.

Nikkei, another contractor, had said that construction could be halted. The consortium also includes Mitsubishi Heavy Industries, Mitsubishi Corp, Kajima Corp and Turkish company Yapi Merkezi.

Dubai plans to reduce spending in 2010

Dubai plans to reduce government spending this year but still forecast a second consecutive budget deficit due to ongoing infrastructure investments and the debt-laden emirate’s weaker economy, according to its 2010 draft budget.

The 2010 budget, which was approved by Dubai’s ruler Sheikh Mohammed bin Rashid al Maktoum on Thursday, envisages a budget deficit of Dh6bn ($1.6bn), on revenues of Dh29.4bn and total spending of Dh35.4bn.

Slated spending is down 5 per cent from last year’s fiscal plan.