Dubai-based ship builder expects major deal wins following debt re-organisation
Drydocks World, which owns the Middle East’s biggest shipyard in Dubai, expects to win contracts worth US$350m after a debt reorganisation agreement with lenders is completed, its chairman said.
“We have presently a number of letters of intent,” Khamis Juma Buamim said in an interview in Dubai today. Clients have told the company that, once the debt reorganisation is complete, the letters can be activated and they are mainly for “quite lucrative” projects, he said. “We are looking at an additional potential of US$300m to US$350m.”
Drydocks has proposed repaying creditors over five years as part of a plan it submitted March 8. It’s one of several Dubai companies seeking to reorganise debt after property prices and asset values slumped and credit markets froze at the onset of the 2008 credit crisis.
The company borrowed US$2.2bn in 2008 to finance two acquisitions in Singapore to gain ships and Asian shipbuilding sites. US$1.7bn was for three years at 170 basis points, or 1.7 percentage points, over the London interbank offered rate, and another US$500m was for five years at 190 basis points over Libor, according to data compiled by Bloomberg. The company says it expects to complete restructuring in July.
So far this year, Drydocks has won US$300m of contracts in Dubai for building and converting ships and is making “US$30m to US$35m a month” from its repair side, Buamim said. Areas on which it’s focusing include the Gulf of Mexico, the North Sea, the Arabian Gulf for its oil and gas industry and the Far East because of potential growth in exploration for hydrocarbons, he added.
Drydocks made a profit of US$125m before interest, tax, depreciation and amortisation in 2011 and Buamim said he “will not accept less than that” this year. The company cut costs by as much as 25 percent last year and wants a further reduction of as much as 15 percent in 2012, he added.