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UAE lender FGB to convert bonds into shares Feb 21

Bonds converted at price of 28.8 dirhams per share; FGB new share capital adjusted to 1.5 bln dirhams

February 20, 2011 3:32 by

Abu-Dhabi based First Gulf Bank (FGB) is to convert bonds worth 3.6 billion dirhams ($980.4 million) into shares earlier than scheduled, at a valuation significantly higher than the current share price. FGB, the United Arab Emirates’ second biggest bank by market value, will list 125 million new shares on the Abu Dhabi bourse on Feb 21 after converting bonds issued in July 2008 at a price of 28.80 dirhams per share, a statement said.

Shares in FGB ended 3.6 percent lower on Sunday, at 17.10 dirhams.

The bank’s share capital will be adjusted to 1.5 billion dirhams from 1.38 billion dirhams, the statement said.

“The board of directors and the management are confident of the bank’s rising profitability,” said Andre Sayegh, chief executive officer, in the statement.

“We are confident that as common shareholders, the bondholders will benefit from their investment in the bank’s future growth over the years to come.”

FGB issued the convertible bonds in 2008 to fund its growth. The banking system in the UAE is trying to recover from a sharp rise in provisioning and sluggish loan growth over the past two years as the global financial crisis hit profitability.

Earlier this month, FGB reported a record full-year profit of 3.42 billion dirhams but fourth-quarter net profit was largely flat.

In January, FGB sold five-year bonds worth 200 million Swiss francs ($211.8 million) with a coupon of 3 percent after holding off on a benchmark $500 million bond citing volatile market conditions, at the end of 2010.

(Reporting by Rachna Uppal; Editing by Firouz Sedarat)

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