Dubai Investments, the investment holding company, may buy the Emirates District Cooling (Emicool) stake put up for sale by real estate developer Union Properties, chief executive Khalid bin Kalban said on Wednesday.
Emicool, set up in 2003, is jointly owned by Union Properties and Dubai Investments. The JV partners have the "first right of refusal" and Dubai Investments has already exercised the option, Mr bin Kalban said.
“They [Union Properties] are not allowed to sell unless Dubai Investments decline,” Mr bin Kalban said. “It’s according to the joint venture agreement which was done a long time ago when the company was formed. We have already agreed with UP… sent them a letter saying we are exercising our right and that means no one can buy unless we decline.”
"Meaning of exercising is that we have accepted the price so far [offered by] other investors to Union Properties," he said. Though, there are many steps in the process yet to be completed in terms of a potential deal.
Union Properties said it is in the final stages of an agreement to sell its entire stake in Emicool as it looks to generate additional revenues and expand into new markets. The developer's share of net assets in the company is valued at Dh355 million, according to its annual report.
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The company has received several offers for its shareholding in Emicool from UAE firms, it said in a regulatory filing to the Dubai Financial Market, where its shares are traded. Union Properties is currently finalising the legal formalities, and will be announcing the buyer in the upcoming days, it said without identifying the potential buyer or the financial details.
Emicool’s core operations are to provide district cooling services for residential, commercial and industrial areas, as well as distributing, transporting and selling cold water used in cooling equipment for individual and corporate clients.
Its operations span areas such as MotorCity, Dubai Investments Park, Dubai Sports City, Uptown Mirdif, Mirdif Hills and Hotel Palazzo Versace, among others. The firm has also signed contracts to build and operate cooling facilities in Palm Deira.
Emicool has steadily increased its overall productivity, which rose 18 per cent in 2017 and seeks to expand its operations to more than 500,000 tonnes by 2020, according to Union Properties' statement.
“Over the past few years, Emicool has become a well-established name in the UAE’s and the region’s district cooling services sector, and has contributed significantly to the growth and development of Union Properties,” said Ahmed Khouri, the group chief executive of Union Properties.
The developer, which restructured its board last May, has struggled to maintain profitability amid sliding real estate prices in the UAE. It is looking to diversify income streams, expand its footprint outside its home market and enter new business lines. In the second quarter of 2017 Union Properties posted its biggest-ever quarterly loss of Dh2.3 billion and swung to a Dh45 million loss in the third quarter of last year.
