Dubai's Drydocks $2.2bn loan deal unlikely in 2011

Dubai World unit's chairman Khamis Juma Buamim says discussions with banks are still ongoing
Dubai's Drydocks $2.2bn loan deal unlikely in 2011
DDW, a unit of state-backed conglomerate Dubai World, said a proposed $2.2 billion loan deal with lenders expected to be completed by the end of April may not be reached this year.
By Reuters
Tue 16 Aug 2011 07:08 PM

Drydocks World, a unit of Dubai World , said a proposed $2.2 billion loan deal with lenders expected to be completed by the end of April may not be reached this year.

"Discussions (with banks) are still ongoing and it has not been completed yet," Khamis Juma Buamim, chairman of Drydocks World told Reuters on Tuesday.

"I can't confirm if we will reach a restructuring agreement this year," he added, when asked if he was confident an agreement would be struck before the loan comes due in November.

Dubai World's shipbuilding unit is restructuring a $2.2 billion facility taken in October 2008. The loan comprises a $1.7 billion three-year loan and a five-year $500 million loan.

The Dubai-based ship and rig builder said earlier this year that it expected to complete the restructuring by April 30 and had agreed on the headline terms with banks.

The talks with lenders are also aimed at making provisions for a new long term working capital facility.

"Some points still need to be clarified with the banks," Buamim said, declining to give more details.

Bookrunners on the 15-lender syndicate were BNP Paribas, HSBC Mashraq, Standard Chartered and Lloyd TSB Bank among others.

Dubai World, the Gulf emirate's flagship conglomerate, which has itself restructured $25 billion in debt, has said Drydocks World is not part of its own restructuring as it had sufficient financial capacity to service its own debt.

Dubai was hit hard by the global financial crisis, which sent property prices slumping by more than 50 percent and forced several state-owned entities to restructure their debts.

Limitless, a Dubai World real estate arm, has rolled over a $1.2 billion loan owed to one syndicate of banks several times.

"Drydocks restructuring will be a tough one to negotiate purely because of the mixture of lenders in the consortium," a Dubai-based banking source said.

The lenders include a number of foreign banks and the company is not finding it easy to push through the terms to them, said the source.

"The loan is also actively traded in the secondary market and we have seen interest from the foreign banks to offload their positions," he added.

Drydocks World signed a new $200 million credit facility in January.

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