Chairman of Dubai World unit says has not asked government for financial support
Drydocks World, the ship-repair unit owned by
state-controlled Dubai World, may reach a deal on restructuring $2.2bn of debt
with creditor banks in March, Chairman Khamis Juma Buamim said.
“We have not asked for a government guarantee” for the
restructuring, under which it’s negotiating with banks for a new loan, Buamin
told reporters at Dubai Maritime City.
Drydocks World will pay back the loans in five to eight
years and continues to pay interest on them at existing terms, he said.
Drydocks World borrowed $1.7bn for three years in August
2008 from a group of banks at 170 basis points, or 1.7 percentage points, over
the London interbank offered rate, according to data compiled by Bloomberg. It
borrowed another $500m for five years at 190 basis points over Libor, the data
The emirate’s government may not support Drydocks World with
its debt restructuring as that responsibility falls on its parent Dubai World,
Mohammed Al Shaibani, the director general of Dubai ruler’s court, said Sept
23. The government in March 2010 provided $1.5bn in cash to Dubai World and
converted $8.9bn of loans to equity as part of the $25 billion debt restructuring.
Drydocks World’s Dubai unit, the Middle East’s largest shipyard,
will post a profit of $116m in 2011 that may rise by 15 percent next year,
Buamin said. It reduced losses from its southeast Asian business to 5 percent
of revenue in 2011 from more than 20 percent last year and is looking for joint
venture partners for its contracting and manpower businesses as well as to add
capacity, he said.
Drydocks World’s Dubai unit carries out vessel conversions,
ship building and offshore construction, apart from ship repairs, mainly of
ultra and very large crude carriers. The company has yards operating in
Singapore and Indonesia, in Graha, Pertama and Nanindah. It also operates a
fleet of 158 vessels, comprising tankers, bulk, cargo vessels, tugs, anchor
handling tugs for charter, according to its website.
Drydocks World is concentrating on the oil and gas industry,
where demand is being driven by an ageing global fleet and increasing energy
needs, Buamin said. The company cut overall costs by $199 million this year and
plans to invest $300m over the next five years, he said.
Monarch Alternative Capital LP, a New York-based investment
company which filed a claim of about $45.5m in a London court against Drydocks
World in October, has asked for a summary judgment in the case, according to
Dubai and its state-owned companies, excluding finance
companies, have outstanding debt of $101.5 billion and may need further
financial support to meet these obligations, Moody’s Investors Service said in
a report Dec 6. The emirate, the Gulf’s trade and tourism hub, was on the brink
of a default in 2009 and is recovering after a $20bn cash injection from the
United Arab Emirates’ central bank, the Abu Dhabi government and its banks.