Dubai Duty Free has announced it will borrow $750m from a syndicate of international banks to help finance the Dubai International Airport expansion.
DDF, which is owned by a group of government-related entities including Dubai Airport Corporation and operates all retail outlets at Dubai airport, is contributing about one-third of the cost of the massive airport project, which includes a new concourse and is expected to increase capacity to 95m passengers.
The company raised $1.75b in a six-year syndicated loan last year, in what was its first international financing in its 30-year history.
It will now also borrow $750m loan from Abu Dhabi Commercial Bank, Emirates NBD Capital Limited and Standard Chartered Bank, using a combination of senior unsecured conventional and Islamic financing facilities.
The new loan is priced at 2.25 percent above Libor and will have a five-year tenor to expire at the same time as last year’s loan.
DDF executive vice chairman Colm McLoughlin said in an interview he anticipated more loans in the future and said DDF had not ruled out an initial public offering.
"We haven't a plan just now, but in five years' time or in two years' time when there's not so much outstanding, the airport's further continued expansion will need funds, and it's part of our duty to do it, so I'm quite certain we will [raise more funds]," McLoughlin told the Wall Street Journal.
"[An IPO] has been discussed, but the real answer is no. We keep on being asked by people ‘would we go do an IPO for some of our company’, and the honest answer is we don't know because the government decides this one day or not.
“I read the same thing about Emirates Airline all the time. We have a number of banks say to us it's the sensible thing to do, but certainly from Dubai Duty Free's point of view we don't need to do anything like that at the moment. Our own operation is cash-rich."
Retail sales at Dubai airport have increased every year and reached $1.6bn in 2012.
The company said in July it made $874m in sales in the first half of the year, up 13 percent on the same period last year.
It expects to rake in $1.8bn by the end of the year and McLoughlin said the target was $3bn after Concourse D opens later this decade.