Abu Dhabi - Arabstoday
The AED16.8bn ($4.6bn) agreement between Aldar Properties and the Government of Abu Dhabi is credit-positive for the troubled developer, said Moody\'s in a statement. In its initial assessment of the proposed transaction, the rating agency said that the deal alleviates its concerns relating to Aldar\'s 2012 debt maturities. The agreement relates to a package of property sales, transfers and reimbursements between Aldar and the government of Abu Dhabi. Moody\'s said it understands that as part of the overall transaction, AED5bn will be applied immediately to the retirement of the outstandings under the existing infrastructure loan from the Abu Dhabi Government. The balance of AED11.8bn will be received over the next four years, pursuant to an agreed payment schedule that includes the receipt of AED4.5bn in the next three months. \"This latter point alleviates Moody\'s previously expressed concerns about Aldar\"s liquidity profile in light of the company\"s 2012 debt maturities,\" the rating agency said in the statement. Moody\'s said that while it is in the process of undertaking a more detailed assessment of the impact of the transaction on Aldar\'s medium-term credit profile, the rating agency regards the deal as broadly credit-positive. \"The agreement further augments the financial support that Aldar has already received from the Government of Abu Dhabi as well as from Mubadala, an Abu Dhabi government investment arm which owns a 49 percent stake in Aldar,\" the statement added. As a result, Moody\'s said that Aldar\'s credit profile will now benefit from increased certainty relating to higher levels of cash inflows over the coming four years further to forward sales having been agreed with the government. The deal will also reduce the company\'s exposure to property sector volatility given the need to complete further third-party property sales and transactions over the medium term. In statement released on Wednesday, the developer announced that Abu Dhabi government had bought 760 units in Aldar’s Al Raha Beach development for $953m. The government has also agreed to reimburse Aldar $1.4bn towards “existing and to be completed infrastructure assets at Al Raha Beach”. That sum will be removed from an existing government loan to the company. Elsewhere, existing assets at Aldar’s Abu Dhabi city centre redevelopment project – known as Central Market – have also been bought by the government at a cost of around $1.6bn. Aldar will continue to work on the Central Market project, although the estimated completion costs of $709m will now be met by the government. The state-backed developer has already sold key assets to the Abu Dhabi government in the past, including the Formula One circuit on Yas Island, and the Ferrari World theme park. In January, Aldar was bailed out by Abu Dhabi via a $5.2bn rescue package which saw it sell convertible bonds to Mubadala, plus the sale of assets. Headquartered in Abu Dhabi, Aldar recorded sales of AED4.7bn for the nine months ending September 30 2011, compared with AED932m for the previous year\'s period, and a profit of AED460m against a loss of AED1.5bn.