Aabar Investments Launches Bond Sale

By Giovanni Legorano 

MILA--Abu Dhabi's Aabar Investments PJS is launching the sale of a bond valued at as much as EUR2 billion ($2.16 billion) that can be exchanged for shares of Italian bank UniCredit SpA, in which the fund is the largest shareholder.

Aabar said in a statement the bond will be offered in two tranches. The first tranche will be due in 2020 and has an initial principal amount of EUR750 million that can be raised by an additional EUR250 million. The second will have the same principal and upsize amounts but will be due in 2022.

At the same time, the fund said it would buy back the full outstanding amount of bonds exchangeable into shares of Daimler AG it issued in 2011 and which are due in 2016.

"We are taking advantage of the current aggressive equity linked market conditions to put in place an attractive long term financing for Aabar," said Khadem Abdullah Al-Qubaisi, the fund's chairman.

Aabar said it remains committed to its long-term investment in UniCredit, which represents a 6.5% stake in the bank, according to the Italian stock market regulator Consob. The fund is represented on the Italian bank's board by Luca Cordero di Montezemolo, the former chairman of sports-car maker Ferrari.

The newly issued bonds, whose base value of EUR1.5 billion corresponds to around 3% of UniCredit's shares, will pay a semiannual coupon of 0% to 0.5% for the ones maturing in 2020 and 0.5% to 1% for those maturing in 2022. Their exchange price will be 40% to 45% higher than the volume weighted average price of the bank's shares on Tuesday.

Deustche Bank AG will act as sole coordinator of the sale of the bonds exchangeable into UniCredit's shares and as purchase agent for the buyback of the bonds exchangeable into Daimler's shares.

Write to Giovanni Legorano at [e-mail]

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