Tabreed Plans First Cash Dividend in 8 Years as U.A.E. Recovers

National Central Cooling Co., the United Arab Emirates utility with the best-performing shares in Dubai last year, plans to pay its first cash dividend in eight years as profit climbs amid a recovery in the property market.

Tabreed, as National Central Cooling is known, will pay 5 fils a share for 2012, it said in a statement to the Dubai stock market today. The company last paid a cash dividend in 2004, according to data compiled by Bloomberg and confirmed by an external spokesman for Tabreed, who asked not to be identified in line with company policy. Tabreed paid a 7 percent stock dividend in 2007, data compiled by Bloomberg show.

The utility is benefiting from a recovery in the U.A.E. property market as demand for housing and related services climb after Dubai witnessed one of the steepest real-estate industry crashes following the 2008 world financial crisis. Tabreed shares surged 144 percent last year. The stock so far has gained 40 percent this year, the second-best return in Dubai after Emaar Properties PJSC.

Mubadala Development Co., the Abu Dhabi state-controlled investment company that holds about a 15 percent stake in Tabreed, will receive a 5-fil dividend as a common shareholder, the external spokesman said. It will also be entitled to an equivalent payment under the terms of mandatory convertible bonds issued in April 2011 and December 2012. Mubadala has “agreed to accept this payment in the form of equivalent non-coupon bearing mandatory convertible bonds, which can be converted into Tabreed shares by April 2019,” Tabreed said.

Profit Climbs

Mubadala in 2011 agreed to provide Tabreed long-term capital of 1.7 billion dirhams ($463 million) in mandatory convertible notes due 2019 and a loan facility of as much as 1.4 billion dirhams. Tabreed said in December it will convert 1.13 billion dirhams of loans from Mubadala into mandatory convertible bonds.

Tabreed reported a 29 percent increase in 2012 profit as revenue advanced and finance costs declined. The company operates 59 plants in the U.A.E. and six facilities in Bahrain, Oman, Qatar and Saudi Arabia, according to its financial statements for last year.

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