Unit of Dubai Holding sought debt revamp after series of boom-time acquisitions
Dubai International Capital’s creditors signed an agreement on the terms to restructure $2.4bn of debt, said two bankers involved in the talks.
Lenders will get 2 percent interest on about $2bn of loans and will extend maturities to five years, the bankers said, who declined to be identified because the talks are private.
The maturities of a further $400m in loans will be extended for three years at current rates and the terms are likely to come into effect mid-December, they said.
Dubai International, part of the emirate’s ruler Sheikh Mohammed Bin Rashid Al Maktoum’s Dubai Holding group, had to seek a restructuring after a series of acquisitions during Dubai’s boom years. The company is one of several government-related entities altering terms on debt after the collapse of Lehman Brothers Holdings in 2008 roiled credit markets worldwide and triggered a slump in real-estate prices.
“This is a step forward in the wider restructuring of Dubai Inc, but the devil is in the detail,” said Ahmad Alanani, Dubai-based head of fixed-income sales for the Middle East and North Africa at Exotix.
“DIC’s ability to repay will depend on asset valuations. If the valuations were optimistic and asset prices do not recover in line with the valuations, we may be back here again in six years.”
A spokeswoman for Dubai International confirmed that the restructuring has been agreed. She declined to be identified in line with company policy. A committee of six lenders, HSBC Holdings, Emirates NBD, Royal Bank of Scotland Group, Lloyds Banking Group, Mashreqbank and Noor Islamic Bank, negotiated with DIC on behalf of about 20 lenders.
DIC owns stakes in companies including UK-based medical imaging firm Alliance Medical, budget chain Travelodge Hotels and industrial packager Mauser.
The company sold its stake in Oger Telecom in August and two months later offloaded its holding in hotel operator Ishraq Dubai for $130m. It also sold its 45 percent holding in steel castings company KEF Holdings Ltd. to Tyco International for $178m in June after paying $126m for the stake in September 2008.
Dubai World, one of three state-owned holding companies, agreed with creditors in March to restructure $25bn of debt. Nakheel, the builder of man-made islands off Dubai’s coast, got the approval of all its bank creditors in July to restructure about $16.1bn of debt.
Dubai Group, also controlled by Dubai Holding, is restructuring $10bn of liabilities and negotiations may be completed by the end of this year or early next year, Hussain al Qemzi, chief executive officer of Noor Islamic Bank, one of the banks negotiating the deal, said on Oct 10.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.