US$833m sale of Pearl Energy

11 Apr 2008

Simmons & Simmons advises Aabar on US$833m sale of Pearl Energy

Simmons & Simmons has advised Aabar Energy PJSC, the Abu Dhabi-based upstream oil and gas company, in relation to the sale of the shares of Pearl Energy Limited to Mubadala Development Company PJSC, an Abu Dhabi government owned investment vehicle. Pearl Energy Limited is a Singapore based oil and gas exploration and production company with interests in Indonesia, Thailand, Philippines and Vietnam. The deal, valued at US$833m, includes what is believed to be the first ever early redemption of a convertible sukuk.

The sukuk and redemption

Aabar issued a US$460m convertible sukuk al-mudarabah in June 2006. The proceeds of the sukuk were used to purchase assets in the oil and gas industry which included the acquisition of oil drilling rigs and several interests in developed and undeveloped reserves. Aabar held these assets through subsidiary companies, including Pearl. Pearl therefore held assets purchased with the money raised in the sukuk with repayment of the sukuk due in June 2010.

Aabar’s shareholders decided in March 2008 to accept Mubadala's offer to purchase Aabar’s Pearl shares, thus triggering the early sukuk redemption process.

In order to redeem the sukuk early, approval was obtained from the sukuk-holders at an Extraordinary General Meeting on 9 April 2008.

Aabar solicited and incentivised sukuk-holders to early redemption with a premium factored into the redemption price so that the sukuk could be terminated and the Pearl shares transferred to Mubadala.

Closing the deal

The Simmons & Simmons team advised Aabar on all aspects of the Pearl share sale and the early sukuk redemption process. Allen & Overy advised Mubadala and Lovells advised Aabar Sukuk Limited (the issuers of the sukuk).

The Simmons & Simmons team was led by corporate and projects partner George Booth in Abu Dhabi for corporate and transactional aspects and Islamic finance partner Muneer Khan in Dubai, in relation to the sukuk redemption. They were supported by Chris Turner, Eyad Mahadeen, George Papanikitas, Omar Shariff and Bilal Khan.

George Booth says:

“This is the second large transaction which we have advised Aabar on this year. We are delighted to have supported Aabar on this transaction and look forward to continuing our relationship with them in the future.”

Aabar Energy says:

“This was a truly unique transaction and we were pleased to have the Simmons & Simmons team on hand to guide us through it.”

A Simmons & Simmons team led by George Booth previously advised Aabar in relation to the sale of its drilling company, Dalma Energy, to GulfCap in a deal valued at US$446m, which closed in January 2008.


Notes for editors:

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