Tabreed 06 Prospectus - London Stock Exchange

Also, Tabreed is obliged to make the payments under the relevant Transaction Documents directly to
the Trustee and the Trustee, will have direct recourse against Tabreed to recover payments due to the
Trustee, from Tabreed pursuant to such Transaction Documents.
Risk Factors relating to the Certificates
Plants Becoming fixed to the land
Under UAE law, as Tabreed’s cooling plants are fixed to the land on which they are constructed,
these cooling plants are deemed to be an integral part of the land on which they are sited.
Accordingly, title to the applicable land includes title to the cooling plants which have no separate
rights of ownership.
As Tabreed does not generally own the land on which its cooling plants are constructed, Tabreed
only has contractual rights to use of the land on which the cooling plants are sited and, hence, to the
cooling plants themselves. Accordingly, Tabreed will not give any warranty relating to transfer of
construction work under the Istisna’a Agreement. Furthermore, Tabreed can only pass title to
machinery and equipment relating to each of the Plants whose construction is being financed by the
proceeds of the issue of the Certificates. Consequently, where Tabreed fails to pay the Exercise Price
under the Purchase Undertaking and, as a result, the Trustee exercises its right to sell the Assets to a
third party, the value of the machinery and equipment may be significantly lower than Exercise Price
and the Certificateholders may therefore receive less than they would otherwise expect to receive.
Tabreed shall remain liable under the Purchase Undertaking for the shortfall between the proceeds of
sale to third parties and the Exercise Price.
Liquidity of the Certificates
Application has been made to the UK Listing Authority for the Certificates to be admitted to the
Official List and to the London Stock Exchange to admit the Certificates for trading on the Market.
There can be no assurances that a secondary market for the Certificates will develop, or if a
secondary market does develop, that it will provide the Certificateholders with liquidity of investment
or that it will continue for the life of the Certificates. The market value of the Certificates may
fluctuate. Consequently, any sale of the Certificates by Certificateholders in any secondary market
that may develop may be at a discount from the original purchase price of such Certificates.
Counterparty risk
Pursuant to the Commodities Purchase Agreement, the Issuer will use certain of the proceeds of the
issue of the Certificates to acquire certain commodities from Tabreed. On the first Periodic
Distribution Date, it is intended that such commodities shall be sold by the Issuer to the
Counterparty pursuant to the Undertaking to Purchase (Commodities). In the event that the
Counterparty fails to comply with its obligations under the Undertaking to Purchase (Commodities),
such failure will result in the Issuer being unable to comply with its other obligations under the
Istisna’a Agreement. This gives Tabreed the right to trigger an Istisna’a Event of Default which will
result in the Certificates being redeemed earlier than the Scheduled Dissolution Date.
Consents to Variation of Transaction Documents and other Matters
The Declaration of Trust contains provisions permitting the Trustee, (acting on behalf of the
Certificateholders), from time to time and at any time without any consent or sanction of the
Certificateholders to make any modification to the Declaration of Trust if in the opinion of the
Trustee such modification (a) is of a formal, minor or technical nature, or (b) is made to correct a
manifest or proven error, or (c) is not materially prejudicial to the interest of Certificateholders.
Unless the Trustee otherwise decides, any such modification shall as soon as practicable thereafter be
notified to the Certificateholders and shall in any event be binding upon the Certificateholders.
Enforcing Foreign Judgments in Dubai
Under current UAE law, the courts are unlikely to enforce an English judgment without re-examining
the merits of the claim and may not observe the choice by the parties of English law as the
governing law of the relevant Transaction Documents and Certificates.
Judicial precedents in the UAE have no binding effect on subsequent decisions. In addition, court
decisions in the UAE are generally not recorded in publicly available reports. These factors create
greater judicial uncertainty.
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