Dubai's DIFC Investments pulls $350mn loan

DIFC Investments, the investment arm of the Dubai International Financial Centre (DIFC), has decided to pull its secured $350 million syndicated loan from the market, banking sources close to the deal said on Monday.

Goldman Sachs launched syndication of the loan last week and proceeds of the one-year term loan were to be used for general corporate purposes.

The deal paid a margin of 400 basis points (bps), up from 75 bps paid by the borrower previously.

The company felt the new facility was too expensive and that it has existing cheaper liquidity so made the decision to withdraw it from syndication, one of the bankers said on Monday. A spokeswoman for DIFC said she was not immediately able to comment.

DIFC Investments signed a $500 million loan in March 2008 to back its acquisition of the UK's SmartStream Technologies Group, which matures on Dec. 4.

One of the bankers close to the deal told newswire Reuters last week that DIFC had already acquired state funding to refinance the original acquisition loan.

Dubai government-owned entities, known collectively as Dubai Inc., have raised $32.7 billion of loans this year, according to Reuters data, but the loan market has been closed to them since the collapse of U.S. investment bank Lehman Brothers.

Reuters reported earlier on Monday that Dubai's sovereign debt stands at $10 billion while the debts of state-affiliated firms amount to $70 billion, citing a member of the Gulf emirate's ruling council.

Mohamed Alabbar told a conference that the Gulf Arab trade and tourism hub was rationalising expenditure and consolidating activities in the face of the global crisis, adding that the Dubai government was ready to step into help state-affiliated companies if needed. (Reuters)

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