Sources say Gulf General Investment Co is latest example of a Gulf company requesting more breathing space on debt
Dubai-listed conglomerate Gulf General Investment Co (GGICO) is seeking to restructure loans linked to a 2.8 billion dirham ($762 million) debt plan which it agreed four years ago, banking sources told Reuters.
It is the latest example of a Gulf company requesting more breathing space on debt as low oil and gas prices weigh on economies around the region.
The group, which has investments spanning financial services, property, hospitality, manufacturing and retailing, began to struggle at the start of 2016 and warned banks soon afterwards that it would not be able to meet some debt installments, the sources said. They declined to be named because talks are not public.
More recently GGICO, 50 percent-owned by the Al Sari family from the emirate of Sharjah, requested its approximately 27 lenders to help it restructure its debt, the sources said.
GGICO declined to comment when contacted by Reuters.
Creditors are set to hold a meeting to discuss the request in the second week of October, said one of the sources, adding that banks would consider how to create a new framework for the debt.
Under the original restructuring plan agreed between the company and creditors in 2012, 2.8 billion dirhams in debt would be repaid over a six-year schedule.
According to GGICO's financial statements, it was required to make cumulative debt repayments of 625.13 million dirhams up to December 31, 2015. According to Reuters calculations, it was due to pay an additional 764 million dirhams by the end of 2016.
GGICO is now keen to restructure that payment and other remaining payments due by 2018, the sources said. They said the company had been facing subdued economic activity and lower asset values.
The United Arab Emirates economy has felt the pinch from low oil prices, with reduced government spending and lower consumer confidence.
Several other companies have sought help on their debt payments in recent months. Abu Dhabi's Al Jaber Group is seeking a new deal on an existing debt restructuring plan, while Pacific Controls, a Dubai-based technology company, began talks with banks during the summer after hitting problems with repayments.