Empower to raise Dh500m loan

Dubai-based district cooling firm Empower will tap local banks to raise Dh500 million ($136 million) loan for the establishment of its upcoming projects in the local market.

The company is currently negotiating a Dh500-million loan deal with banks and hopes to close it in April-May, said its Chief Executive Ahmed Bin Shafar. He, however, refused to disclose the name of the banks.

These funds will be used to set up new district cooling plants in the UAE including two in Dubai’s Business Bay area this year.

Bin Shafar said the company’s funding options included, internal cash generated from operations, medium to long term funding from banks and financial institutions and shareholders equity contributions.

Addressing a press conference to announce the company’s annual results, Bin Shafar said around Dh150 million debt is maturing this year which the company will repay through its internal cahsflow.

Empower’s debt with local and foreign banks, according to Bin Shafar, is approximately Dh1.4 billion. The banks include Emirates NBD, Royal Bank of Scotland, Standard Chartered, Citi and HSBC.

The company’s net profit jumped 25 per cent to Dh162 million for fiscal year ended December 2011 – thanks to higher demand for district cooling.

The company’s total revenues reached Dh670 million, an increase of 40 per cent over previous year.

“Empower’s operations grew remarkably in 2011 due to higher demand. We also expanded our footprint and enhanced the infrastructure and network in real estate projects to cater to the needs of our rapidly increasing client base. Moreover, the company worked on training its personnel across all levels, which has definitely contributed to these positive results,” he added.

Bin Shafar said the company currently holds 60 share of Dubai’s district cooling market, achieving an increase of 12 per cent in its cooling capacity, with over 370,000 refrigeration tonnes last year.

Consolidation

He said regional district cooling industry is growing at the rate of 15 to 20 per cent and the biggest obstacle in the way of its progress was the absence of long term planning among the companies working in the district cooling industry. He pointed out that the Middle East was still in its infancy in district cooling, compared to the scale of development across the region, and commended the regional governments for encouraging the environment-friendly cooling technologies.

Empower CEO also called for consolidation of the industry. “We are open to a proposal for consolidation; we have to look at the other party’s balance sheet, customer base and other facts before we can go ahead with decision.” Challenges facing the development of the industry in the UAE include lack of visibility to project development timelines and robust strategy for capacity creation in many of the district cooling companies which has led them to financial difficulties.

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