erties said on Wednesday it would issue $450 million in convertible bonds, and that it may have to write off loans related to troubled Islamic mortgage provider Amlak.
Emaar said in a statement the five-year note, which would carry a coupon of 7.5 percent, was increased from an initial $375 million on strong demand, and could be further raised up to $500 million.
In the prospectus for the bond, Emaar said Amlak -- in which it holds a 48 percent stake -- may need to restructure its debt obligations which would expose Emaar to 'loan write offs and a decrease in the value of its investment.'
'Amlak ... may need to restructure its debt obligations which may expose the guarantor to loan write offs and a decrease in the value of its investment,' Emaar said.
'Should Amlak's financial condition worsen or fail to improve, (Emaar) may be required to make provisions in its financial statements for potential losses arising under the inter-company loans.'
Emaar, the United Arab Emirates' largest listed property firm, said it would use proceeds from the bond to refinance short-term liabilities and for general corporate purposes.
'This is a pretty landmark transaction. It wasn't so long ago that real estate and Dubai equalled a 'no-go',' said one banker familiar with the deal, who asked not to be named.
Amlak and rival lender Tamweel have not issued mortgages nor been traded on the market since November 2008.
On Sunday, Dubai Islamic Bank raised its stake in Tamweel to 57.33 percent, effectively ending the prospect of a long-awaited Amlak-Tamweel tie up.
Emaar, builder of the world's tallest tower, said on Wednesday its board approved the convertible bond issue, which requires shareholder approval.
Emaar said it will issue its $450 million bond through a special purpose vehicle which will lend the funds on to Emaar.
JP Morgan, Royal Bank of Scotland and Standard Chartered are joint bookrunners for the notes which are to be listed the Euro MTF market of the Luxembourg Stock Exchange.
Books are to close later on Wednesday, the banker said.
Emaar's plans come after the Dubai government returned to bond markets on Wednesday with a $1.25 billion bond, its first sovereign issue since the 2009 debt crisis. Order books for the bond was about $5 billion, a government statement said.
'(Emaar's) objective is to term out short-term debt and deleverage their balance sheet,' the banker added. 'The issue has already been pre-marketed to international investors to test appetite. The main demand is from convertible and hedge fund investors in Europe, then Asia and then the region.'
Among Emaar's high-profile assets is Dubai Mall, one of the world's largest shopping centres.
The developer also has a joint venture with Italian fashion house Georgio Armani to develop luxury hotels globally and has said it will focus on expanding in the Middle East, north Africa and south Asia in 2010.
(Additional reporting by Rachna Uppal, Tamara Walid and Firouz Sedarat; Editing by Greg Mahlich, David Holmes and Bernard Orr)
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