DP World Raises $1 Billion From Convertible Bonds for Growth

DP World Ltd., the third-biggest ports operator globally, raised $1 billion from a convertible bonds sale to fund acquisitions and growth. The shares fell.

The securities, due 2024, will pay annual interest of 1.75 percent and be converted at a price of $27.1396 a share, a 37.5 percent premium to its average share price today, the Dubai-based company said in a statement distributed via the Regulatory News Service. DP World’s shares dropped 1.3 percent to close at $19.75 on Nasdaq Dubai, paring gains this year to 12 percent.

DP World is “picking the best time” for the issue and its cash position will “look great” with these terms, Ahmed Shehada, head of advisory at National Bank of Abu Dhabi Securities LLC, said in an e-mail today. “If the market does correct, as has been speculated, then it will not be squeezed.”

The Dubai World controlled company said in April first-quarter gross container volume rose 10.5 percent, driven by performance in Asia Pacific, India and the United Arab Emirates. Companies in the U.A.E. are raising funds from bond sales amid falling interest rates and as average yields in the Middle East dropped 60 basis points, or 0.6 of a percentage point, this year to 4.1 percent, according to JPMorgan Chase & Co. indexes.

“Depending on further detail, this may indicate a reluctance to raise capital via equity markets,” Amer Khan, senior executive officer at Shuaa Asset Management in Dubai, said by e-mail today. That “is what a lot of investors had been hoping for” as the stock is quite illiquid, he said.

‘Growth Opportunities’

Money raised from the bond “will be used to take advantage of organic and inorganic growth opportunities, diversify funding sources and general corporate purposes,” DP World said.

DP World, which operates more than 65 terminals across Asia to the Americas, is also in talks with banks to cut the price and triple the size of a five-year revolving credit facility to $3 billion to take advantage of surplus liquidity at banks, three people familiar with the matter said last month.

Emirates Telecommunications Corp., the U.A.E.’s biggest phone company, raised more than $4.2 billion from a four-part bond sale yesterday, and Emaar Malls Group LLC, the Dubai-based owner of the world’s biggest shopping center by area, raised $750 million from the sale of a debut 10-year sukuk.

DP World’s bonds will be settled on or around June 19, the company said earlier today. The ports operator also said it intends to make an application to list the securities on the open market segment of the Frankfurt Stock Exchange.

JPMorgan Securities Plc is acting as the global coordinator for the issue with Citigroup Inc, HSBC Holdings Plc and UBS AG acting as joint bookrunners, according to the statement.

The company reported a 10.9 percent increase in profit for 2013 to $604 million, and planned to spend $3.7 billion boosting capacity between 2012 and 2014, according to its results.

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