Abu Dhabi National Energy Company (TAQA) may merge into another state-owned business, Reuters reported quoting sources familiar with the matter.
The merger would aim to make the company’s crippling debts more manageable and try to turn around its performance, the report said.
TAQA, the only listed quasi-sovereign company in Abu Dhabi, invested billions of dollars in fields in Canada and the North Sea competing with international giants such as BP and Exxon.
But the huge debts it accumulated to secure funds for its expansion and the big drop in oil prices have put pressure on the company to come up with a rescue plan.
“The company is embroiled in a battle for its future,” one source close to the company told Reuters.
TAQA posted a Q4 loss $980mn and said it would slash capital spending by 39% this year and make $410mn of cost savings over the next couple of years.
It is also conducting a review of its assets ahead of potential sales, Reuters reported.
According to the source, Blackstone has been hired to advise on ways to tackle its debt pile, which has reached some $28.5bn.
Sources told Reuters last week that TAQA was raising a $3bn five-year loan to help consolidate its multiple debts into a single facility, which in turn could “open the way to a merger”.
“It is the biggest stumbling block so by reducing the debt, Abu Dhabi can do whatever it wants and fold it into any other entity,” said the source, adding merger considerations were still at any early stage.
The Abu Dhabi Water and Electricity Authority (ADWEA) or Mubadala Petroleum are the likely merger candidates, according to three Abu Dhabi-based sources.
ADWEA already owns 53.4% of TAQA on behalf of the government and Reuters said would be a good fit with TAQA ‘s power generation assets in the UAE, while Mubadala’s oil and gas focus would also ensure synergies, the sources said.
TAQA declined to comment, while a spokesman for Mubadala dismissed merger talk as rumours and ADWEA could not be reached for comment, Reuters said.
