District cooling firm Empower settles $728m loan and targets zero debt

The Dubai firm plans further investment to grow infrastructure network

Jumeirah Beach Residence in Dubai is one of the neighbourhoods serviced by Dubai district cooling firm Empower. Sarah Dea / The National

Emirates Central Cooling Systems Corporation (Empower), a Dubai-based district cooling provider, paid loans totalling $728 million (Dh2.67 billion), enabling it to have zero debt by the end of the year.

“We have pre-paid the loan facility instalments two years prior to its final maturity,” said Ahmad Bin Shafar, chief executive of Empower, in a statement on Tuesday. “This reflects the robustness and sustainability of our business model and our prudent financial strategy that is paying off significantly.”

Three final loan instalments of $157.5m were prepaid prior to their maturity, Empower said in the statement. With these transactions and payment of a Dubai Islamic Bank facility of $128m, the company has fully settled its term loan facilities totalling $728 ahead of the agreed timelines, including ones due in 2019.

“This prepayment has a specific significance as Empower has fully settled all its financial indebtedness and will not have any debt balance in its books as December 31, 2018,” said Mr Bin Shafar.

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The debt financing was secured to acquire rival Palm Utilities for $500m from Istithmar World in 2014, and for other capital expenditure purposes.

The company has more than 1,090 buildings that are using district cooling services, catering to around 100,000 customers. It operates more than 1.4 million refrigeration tonnes (RT) of cooling, providing services to large scale real estate developments such as DIFC, Palm Jumeirah, Jumeirah Lake Towers, Ibn Battuta Mall, Dubai Healthcare City, and Dubai Design District, among others.

It typically invests in plants and network infrastructure based on demand in a particular project.

Empower now plans to further develop its district cooling infrastructure and network to enable continued growth from 2019 onwards.

"We will continuously invest to the rapidly increasing demand for district cooling in Dubai,” Mr Bin Shafar said.

It is in ongoing discussions with banks over future funding requirements and said on Tuesday the long term and stable cash flows generated from district cooling reduces the financing risk the company and financial institutions.

The government of Dubai is increasingly viewing district cooling as a key element of its energy strategy and aims to increase the penetration of district cooling services.