DUBAI, Feb 13 (Reuters) - The $600 million loan which Emirates Central Cooling Systems Corp (Empower) is using to back its acquisition of Palm Utilities is being syndicated to other lenders, three banking sources said on Thursday.
Dubai district cooling firm Empower announced last month that it was buying Palm Utilities from a unit of Dubai World for $500 million, the latest in a series of acquisitions which have seen assets shuffled between companies ultimately owned by Dubai’s government or the emirate’s ruler.
Empower is funding the purchase with a facility that covers the cost as well as providing a further $100 million for future projects, Empower Chief Executive Officer Ahmad Bin Shafar told local newspaper Gulf News on Jan. 26.
The loan, which has a six-year lifespan and was initially provided by four banks, is now being offered to other lenders interested in joining the deal, the sources told Reuters, speaking on condition of anonymity as the information isn’t public.
Empower confirmed the loan syndication but a spokesperson was unavailable for further comment.
The facility was originally provided by Citigroup, Standard Chartered and local lenders Emirates NBD and Mashreq.
Two further lenders - Commercial Bank of Dubai and Saudi Arabia’s Samba Financial Group - signed up to the loan before the selldown in the wider market began last week, two of the sources said.
The margin on the loan, which has an amortising structure meaning both interest and principal are repaid during the life of the facility, is 205 basis points over the London interbank offered rate, one of the sources said.
Acquiring Palm Utilities, which includes Palm District Cooling, will give Empower about 70 percent of the United Arab Emirates’ district cooling market, Empower said when the acquisition was announced.
District cooling is a centralised system for chilling large buildings, such as offices, factories and tower blocks, instead of having a large number of individual air conditioning units. (Reporting by David French; Editing by Andrew Torchia)