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Union Properties to Raise Capital by 
Selling Bonds Worth Dh2.5 billion

DUBAI - Union Properties said on Sunday its board of directors approved plans to raise capital by selling non-convertible bonds worth Dh2.5 billion to strategic investors.

The move is a departure from its original plan last December to issue convertible bonds.

A convertible bond is a type of bond that can be converted into shares of stock in the issuing company, usually at some pre-announced ratio. From the issuer's perspective, the key benefit of raising money by selling convertible bonds is a reduced cash interest payment.

Dubai’s second largest property developer by market value said the terms and conditions of the issue will be threshed out by the board of directors. No other details were disclosed to the Dubai bourse.

The company said previously it was planning to double its land holdings in Dubai over the next two years.

Union Properties shares closed 1.75 percent higher to Dh0.58.

“Clarification that the Union Properties bond issue will be non-convertible calmed investors as this route it is not dilutive to the value of shareholder equity. A convertible bond would have brought selling pressure to the stock,” said Matthew Wakeman, managing director of cash and equity linked trading at EFG-Hermes.

· rocel@khaleejtimes.com