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Thu 1 Mar 2012 04:01 PM

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Dubai's Drydocks to present $2.2bn debt plan next week

Ship builder hopes to complete restructuring by July - chairman

Dubai's Drydocks to present $2.2bn debt plan next week
Other Dubai World entities are also struggling with their debt maturities (Getty Images - for illustrative purpose only)

Dubai's ship building unit
Drydocks World, in negotiations to restructure a US$2.2bn loan facility,
will present terms of the proposal to lenders on March 8, seeking to put an end
to the long-drawn and complex debt talks.

The debt restructuring of the
Dubai World unit, initially expected to be completed by April last year, has
dragged on as the presence of hedge funds and a lack of government support
curbed prospects of an amicable deal.

Drydocks now hopes to complete
the restructuring by July, its Chairman Khamis Juma Buamim said in an email

"With the support of its
wider stakeholders, significant progress has been made over recent months in
all aspects of the restructuring," Buamim said.

The syndicated facility, taken
out to finance acquisitions in Singapore in October 2008, comprised a US$1.7bn three-year loan paying 170 basis points and a five-year US$500m
loan with a 190 basis points margin, according to Thomson Reuters data.

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

"Drydocks can today announce
that it is confident that it will receive the support of a majority of its
syndicated lenders to the terms of its debt restructuring," said Buamim.

Dubai stunned global markets in
2009 when it sought a standstill on US$26 billion in debts related to Dubai
World. It reached an agreement with banks last year to extend debt maturities
by promising repayment mostly through asset sales.

Other Dubai World entities are
also struggling with their debt maturities, including industrial free zone
operator Jebel Ali Free Zone (JAFZA) that is looking to refinance a US$2 billion
Islamic bond.

Buamim said in December that
Drydocks looks to extend debt repayment for between five to eight years, which
would be similar to the time frame reached by parent Dubai World.

The shipbuilding unit of Dubai
World is not regarded as a strategic asset by Dubai, meaning it has had to
negotiate its own debt solution without the support of the government.

It is eyeing joint ventures for
its southeast Asia business, which could be sold off later to prospective
partners if they proved to be successful.

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