Tabreed Announces Deferrment of 19 May Payment on its 2008 Sukuk

In connection with its 1Q10 earnings release, Tabreed announced:

Following a review of alternatives with respect to the annual distribution on its convertible Ijara 08 Sukuk, Tabreed intends to defer making this payment on May 19^th. Deferring the annual distribution is consistent with the objectives of the recapitalization proposal that will be decided upon by Tabreed’s shareholders and reflects the subordinated and equity-like nature of the 08 Sukuk.  Mubadala Development Company and ACWA Holdings, who together represent a majority of 08 Sukuk holders, have expressed their support for Tabreed’s decision.  Tabreed intends to propose amendments to the terms of the 08 Sukuk in due course in connection with its broader recapitalization program that Tabreed is targeting for completion in Q4 2010.

This is yet another sign of the "knock-on" effect from the slowdown in the construction/real estate sector in the UAE.  Also note that a significant portion of 1Q10 earnings are non cash items related to the Sukuk.