Cooling solutions company Tabreed has gained shareholders’ approval to spend Dh1 billion to buy back convertible bonds held by state-owned investment company Mubadala.
The district cooling utility firm will buy about 854 million bonds, equivalent to 28 per cent of Tabreed bonds that Mubadala holds.
Tabreed plans to cancel the bonds when the deal is completed next month.
The bonds were initially issued as part of a restructuring in 2011, when Mubadala provided Dh3.1bn to help Tabreed pay down its debts that had been built up because of its rapid expansion of cooling plants just before the global financial crisis in 2008.
Mubadala also converted Dh134m of bonds into shares in June last year, in lieu of a cash dividend that was due following Tabreed’s announcement of its financial results for 2012.
Mubadala has a stake in abreed that exceeds 13 per cent, according to Bloomberg data.
Since issuing its bonds, Tabreed has improved its balance sheet and managed to complete a Dh2.6bn debt refinancing announced in January.
Jasim Thabet, Tabreed’s chief executive, said its buy-back of bonds would save the company about Dh30m a year in financing costs.
The buy-back plan was approved unanimously at its general assembly meeting on Sunday.
“This buy-back is part of our wider strategy to continuously improve our capital structure,” said Mr Thabet, adding that the buy-back and the recent refinancing would yield savings of about Dh40m a year in finance costs.
Tabreed shares closed nearly 2 per cent higher in Dubai on Monday.
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