Tabreed completes Dh1bn deal for Al Maryah Island cooling plant

Deal struck with largest shareholder Mubadala to buy the plant and to provide all future district cooling to developments in the southern part of the island.

The cooling company Tabreed has signed a Dh1 billion deal with its largest shareholder Mubadala to buy a key district cooling plant on Al Maryah Island and to provide all future district cooling to the southern part of the island.

A consortium comprising Tabreed and the Mubadala-linked infrastructure fund Mubadala Infrastructure Partners has signed a deal for a 30-year concession, Tabreed said yesterday.

As part of the deal Tabreed, which is 14.2 per cent owned by Mubadala, will acquire Al Wajeez Development Company – the Mubadala-owned outfit which currently provides all the island’s existing district cooling through an existing plant.

Currently it has the capacity to provide 43,000 refrigerated tonnes to the 450,000 square metres of office, retail and hotels which form the first phase of Abu Dhabi’s newest business district. The concession will allow Tabreed and its partners to increase capacity to provide up to 80,000 refrigerated tonnes of cooling as more developments are built.

Tabreed said that the deal would be funded through a combination of equity and a 20-year long-term non-recourse senior loan provided by FGB.

The long-awaited deal comes less than three months after it was reported that Mubadala had rejected bids from GDF Suez and Veolia Environment to buy the cooling plant after the government fund invited bids for the plant from the open market.

A Mubadala spokesman told The National that the company had taken the decision to sell the district cooling plant as part of a long- term plan to put some of the mature infrastructure on the island into the private sector. The bidding process was managed by Bank of America Merrill Lynch, he added.

It also comes amid an increase in demand for district cooling across the UAE as property development which had been shelved due to the financial crisis is resumed.

Shares in Tabreed rose 7.88 per cent in trading yesterday on the news to close at Dh1.78.

“The acquisition of the Al Maryah Island plant, which currently utilises some of the latest district cooling technology, represents an important milestone for us,” said the Tabreed chief executive Jasim Husain Thabet.

Development on Mubadala’s Al Maryah Island has been pushing ahead in recent months with the opening of the Cleveland Clinic Abu Dhabi expected next year.

Work is progressing on a US$1 billion housing and hotel tower project which is being developed by Farglory, Taiwan’s largest listed property developer, and which is expected to complete in 2016. And Gulf Related’s US$1 billion Sowwah Central shopping mall which is being developed next to the upmarket Galleria shopping mall is scheduled to complete in 2017. New headquarters office buildings are also under way on the island for Al Hilal Bank and National Bank of Abu Dhabi.

Like other district cooling operators, Tabreed was hit hard by the property downturn that started in late 2008. It expanded quickly, spending billions of dirhams building air-conditioning plants on the expectation of making huge profits when new customers were connected.

But revenues slowed as projects were delayed and scaled back. In March 2011 the company was forced to restructure its debts, securing Dh3.1bn from Mubadala to tackle its debt pile, much of which was issued in the form of convertible bonds.

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