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Mon 13 Jul 2015 01:51 PM

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Drydocks World enlists Citi for $2.3bn debt restructuring

Maritime engineering business, a unit of Dubai World, said to present new proposals to creditors after the summer

Drydocks World enlists Citi for $2.3bn debt restructuring

Dubai’s Drydocks World has hired American banking giant Citigroup to help it refinance its $2.3 billion of debt.

The maritime engineering business, a subsidiary of conglomerate Dubai World, negotiated a deal in 2012 to push back debt repayments in two tranches.

The first repayment, thought to be around $800 million, is due in 2017; the second matures in 2027.

It was reported earlier this year that the company intended to ask creditors to amend the terms of the 2012 deal. According to the Financial Times, Drydocks World has now enlisted the help of restructuring consultants at Citi’s Middle East arm.

They are expected to make new proposals to creditors, including Standard Chartered and HSBC, to further push back repayment terms on the first tranche of debt.

The FT reported that Dubai as a whole is exploiting low interest rates and increasing confidence in its diversified economy to optimise its $120bn debt portfolio.

In 2012, Drydocks World became the first and only part of Dubai World to use the provisions of Decree 57, a bespoke bankruptcy law put in place to restructure the parent company’s $25 billion of debt in 2010, to amend the terms of its debt.

Earlier this year Abdulrahman al-Saleh, head of the Dubai government’s finance department, was appointed to replace the former chairman Khamis Buamim, who resigned in March with immediate effect.

As well as running Dubai’s largest shipyard, Drydocks World owns the QE2 cruise liner, which it purchased from the ship’s former operator Cunard for $100 million in 2008.

The company had originally intended to transform the ship into a luxury hotel, but the plans stalled as a result of the global recession.

Arabian Business has reported on two proposals being drawn up in the UK to buy back and restore the QE2. One of these is led by a Scottish councillor who wants the ship returned to its birthplace, the Clyde and Greenock dock on Scotland’s River Clyde, where the ship was constructed between 1965 and 1967.

The other is led by QE2 London, a campaign group headed by John Chillingworth, who was chief engineer at the Cunard. He wants to transform the liner into a 530-room hotel and conference centre in East London’s fast growing Docklands area.

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