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Fri 9 Mar 2012 09:51 AM

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Drydocks World proposes deal for $2.2bn debt

Middle East's largest ship repair firm says it wants to repay loans over five years

Drydocks World proposes deal for $2.2bn debt
Jebel Ali Free Zone (JAFZA)

Drydocks World, the Middle East’s biggest ship repair company, has said it is proposing to repay loans over five years as part of a plan to restructure $2.2bn of debt.

Drydocks World presented the terms of its proposal and the steps required to implement it along with the associated timeline to all its syndicated lenders in Dubai on Thursday.

The company said it is confident it can get support for the plan.

“It is a restructuring of the debt for five years,” chairman Khamis Juma Buamim said in Dubai. “We continue to pay interest on the loans.”

Drydocks World is one several companies in Dubai seeking to restructure debt after property prices and asset values slumped in the Gulf business hub and credit markets froze.

Dubai World, one of the three main state-controlled holding companies and Drydocks’ parent, reached a deal last March with about 80 banks to delay payments on $25bn of debt, while Dubai Group is seeking to restructure $6bn of bank debt.

Drydocks World borrowed $2.2bn to finance two acquisitions in Singapore in 2008 to gain ships and Asian shipbuilding sites.

The company borrowed $1.7bn for three years at 170 basis points, or 1.7 percentage points, over the London interbank offered rate, according to data compiled by Bloomberg.

It borrowed another $500m for five years at 190 basis points over Libor, the data shows.

“We would be looking to explore all options” for the South East Asian business, Buamim said.

“We have an exit strategy in the Far East, part of which is redefining our capacity there, our efficiencies and looking at what is core and non-core.”

Drydocks World expects its debt restructuring will be completed by the middle of the year, the company said in a statement.

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