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Tue 18 Oct 2011 04:43 PM

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Dubai’s Drydocks hit with $45.4m lawsuit over loan default

State firm sued by US hedge fund in London High Court in dispute over $2.2bn loan

Dubai’s Drydocks hit with $45.4m lawsuit over loan default
Drydocks World, a unit of Dubai World, is accused of defaulting on a $2.2bn loan

Drydocks World, the ship repair unit of state-owned
conglomerate Dubai World, is being sued by a US hedge fund for the repayment of
$45.5m, it was reported Monday.

US-based hedge fund Monarch Alternative Capital is suing
Drydock World after talks to resolve around $2.2bn worth of debt broke down,
the Financial Times reported.

The action was brought in London’s High Court and follows
nearly a year of negotiations, the paper said. The loan comprises a $1.7bn three-year
loan and a five-year $500m loan.

Drydocks World said in August that talks were ongoing to
reach a debt deal over the $2.2bn loan, despite initially expecting to reach an
agreement with lenders by the end of April.

Khamis Juma Buamim, chairman of Drydocks World, said he couldn’t
confirm “if we will reach a restructuring agreement this year.”

It is the latest in a series of legal actions for the Dubai
government-linked firm. Two Singapore units of Drydocks World were in March sued
in Singapore’s High Court for not paying suppliers.

Drydocks World Singapore and Labroy Shipbuilding &
Engineering, failed to pay S$6m ($4.7m) for goods sold and delivered between
May and December, according to four complaints filed with the Singapore High
Court.

Drydocks refused repeated requests to pay Beng Hui Marine
Electrical, Hoe Seng Huat and Z-Power Automation, according to the lawsuits of
the Singapore-based suppliers.

Dubai World, the Gulf emirate's flagship conglomerate, which
has itself restructured $25bn in debt, has previously said Drydocks World was
not part of its own restructuring and 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.

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

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Khawar Nehal 7 years ago

So Dubai world is not responsible for drydocks world debt ?
Is it responsible on paper ?