Mubadala Seeks To Alter Terms On $3.4bn In Bonds

Abu Dhabi’s state-owned investment fund Mubadala is seeking bondholders’ consent to alter certain contract terms on outstanding bonds worth about $3.4 billion.

Mubadala Development Co, which owns stakes in General Electric and Carlyle, said the main impact of the proposal would be the amendment of clauses relating to an event of default to remove reference to principal subsidiaries and principal joint venture companies.

The proposed changes also affects a clause which says that the Abu Dhabi fund will not pledge any of its assets in a way which negatively affects other creditors.

The company said the move was aimed at making documentation more consistent and officials were not immediately available to clarify further what the motivation was. Analysts to whom Reuters spoke were also still examining the company’s disclosure.

“Mubadala is launching this solicitation process to create a clear and consistent covenant structure across all of its bonds that reflects the maturing nature of Mubadala and its key assets,” the company said in an emailed statement on Monday.

Bondholders have time to vote till November 28 on the proposals and a meeting of noteholders will be held on November 30.

The proposed changes are already included in Mubadala’s base prospectus dated May 2012. Mubadala will pay a consent fee to all bondholders who agree to the changes by a November 20 consent deadline.

Major government-related entities in the wealthy emirate have ramped up their public borrowing in recent years as part of an expansion drive aimed at diversifying Abu Dhabi’s oil-dominated economy. Mubadala’s main mandate is to invest in activities that boost the local economy.

The fund has interests in semiconductors, oil and gas, aerospace and real estate among others.

Mubadala, one of few state-controlled vehicles to publish results, also owns stakes in local companies such as Tabreed and indebted developer Aldar Properties currently in talks to merge with another local player Sorouh Real Estate.

Abu Dhabi sits on 10 per cent of global oil reserves and accounts for 90 percent of the UAE’s oil output, making it one of the world’s wealthiest economies.