June 9 (Bloomberg) -- National Central Cooling Co. fell to the lowest since July after it said Abu Dhabi’s Mubadala Development Co. will convert bonds into equity.
Shares in the company, known as Tabreed, slid 7.5 percent, the most since August, to 1.85 dirhams at the close in Dubai. Mubadala, the Abu Dhabi government-owned investment company that owns 14 percent of Tabreed, will convert about 134 million dirhams ($36.5 million) of bonds into shares at 1.6856 dirhams each, the provider of cooling systems said today in a statement on the Dubai stock market website.
“Convertible bond news is never positive,” Sebastien Henin, who oversees $90 million as head of asset management at the National Investor in Abu Dhabi, said by telephone today. We’ll have to “see what they will do with the shares after the conversion,” he said.
The transaction will result in 79.4 million new shares issued to Mubadala, which will increase the number of Tabreed shares to about 738.5 million, according to the filing. Mubadala swapped the debt in view of Tabreed’s “positive financial and operational performance” and remains a long-term shareholder in the company, it said in an e-mailed statement.
The benchmark DFM General Index retreated 4.1 percent, the most since May 20, paring its gains for the year to 42 percent. Tabreed stocks have fallen 23 percent this year.
The district cooling company, which had 66 plants in the six-nation Gulf Cooperation Council as of the end of March, reported a 22 percent jump in first-quarter profit as it made more than 16,000 refrigerated tons of new connections in the United Arab Emirates, according to an April 28 statement.
Tabreed last week signed a 6 billion-dirham contract to supply the U.A.E. armed forces with air conditioning for the next 20 years.
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