Taqa to borrow US$4.5bn to finance expansion

Abu Dhabi, August 3, 2008 (WAM) - The Abu Dhabi National Energy Company (Taqa) said yesterday it would borrow US$4.5 billion (Dh16.5 billion) to fund an aggressive investment drive that could lift its assets to US$60bn and turn it into one of the world's major energy investment players.

The government-controlled company, already one of the largest oil investment firms in the Middle East, said the loans would include US$1.5bn in bonds and US$3bn in direct credits from banks and other financial institutions.

In a letter to the Abu Dhabi Securities Exchange, where Taqa and 60 other
companies are listed, it said the bonds were in two batches, including
US$1bn, with a maturity interest rate of 6.6 per cent and US$500m for 7.25
per cent. "Taqa has completed the issuance of US$1bn 6.6 per cent senior
notes due on August 2013 and US$500m of 7.25 per cent senior notes due in
August 2018," it said according to a report in Emirates Business 24|7.

"The interest payment dates on the notes are February 1 and August 1, with
first interest payments commencing in February 2009.

"The proceeds of the offering, net of applicable expenses, will be used to
repay borrowings under our credit agreement and for general corporate
purposes," the letter said. It said the company is in the process of
finalising a US$3bn three-year revolving credit facility, adding there are
no additional financing plans at present.

Experts said Taqa is taking advantage of low interest rates to seek funds
for its expansion programmes which include acquisitions of key companies
abroad. One expert said Taqa decided to seek direct credits from banks and
at the same time issue bonds for the sake of funding diversification and
reduction of risks.

"Taqa is taking advantage of the decline in interest rates to get funds for
its expansion strategy outside the UAE," said Karim Helmi, an economist at
the Abu Dhabi-based Emirates Securities Company, one of the leading stocks
consultants in the UAE.

Taqa is trying to diversify its funding sources and lessen risks by breaking
the source of funding into bonds and direct credits," he said. "I believe
Taqa found it a good opportunity now to borrow to finance its operations. I
think it is a good decision to diversify its borrowing sources," he said.

The move followed a decision by Taqa last month to double its capital to
more than Dh8 billion through the planned issuance of Dh4.15 billion in
convertible bonds to shareholders and investors outside the company.

Taqa, which is 75 per cent owned by the Abu Dhabi government, issued nearly
US$2 bn in bonds last year to finance its acquisition drive, which has
boosted its assets over the past five years.

The latest major investment last month involved the purchase of six offshore
oilfields in the North Sea under a Sale and Purchase Agreement with Shell UK
Ltd and Esso Exploration and Production UK. The deal added nearly 40,000
barrels of oil equivalent (boe) to Taqa's existing energy reserves.

The deal followed an announcement by Taqa in June that it had acquired 50
per cent of Compagnie Eolienne du Détroit (CED), which is controlled by the
Paris-based Theolia, a leading European renewable energy company.

Another deal with Theolia involved the creation of a consortium of these two
prequalified companies to respond jointly to the international invitation to
tender for the construction and operation of a 300 MW wind farm located in
Morocco.

Announcing its financial results for 2007 early this year, Taqa said its
revenues jumped by 72 per cent to a record Dh8.3bn, while net earnings shot
up by 113 per cent to more than Dh1bn. Net profits for the first quarter of
2008 also leaped by 525 per cent to Dh398m from Dh64m in the same period of
2007.

Company officials said they expected another record year in 2008 following
the completion of acquisition transactions finalised over the past year.
The company has set a target to boost its assets to US$60bn become a key
player in the global energy industry.