Dubai Holding unit operates 11 business parks in the emirate including the Dubai Media City and Dubai Internet City
A unit of Dubai Holding, the investment vehicle of
the emirate's ruler, said on Thursday it was in talks with lenders to raise a
syndicated loan, with banking sources adding the facility could be worth up to
4 billion dirhams ($1.1 billion).
Tecom Investments, a business park operator and one
of the key assets of Dubai Holding, is expected to use the proceeds for its
growth plans, while some of the cash would also be diverted to the parent
company, one of the sources said.
Tecom said in a statement to Reuters it was seeking
to raise a loan facility and the funds would be used to "support future
growth opportunities and other strategic objectives".
It declined to comment further.
Tecom is close to finalising the group of banks
that will arrange the loan and it intends to complete the deal this year, the
sources said, asking not to be named because the information isn't public.
The loan will have a lifespan of between seven and
eight years and will have an amortising structure, the first source said. Under
an amortising deal, the borrower repays parts of the loan throughout the
duration, as opposed to a bullet schedule which only requires interest payments
to be serviced.
Tecom operates 11 business parks in the emirate
including the Dubai Media City and Dubai Internet City.
It announced plans to build a new development last
month with 440 luxury villas and is also building the Dubai Design District that
would house global fashion brands.
Dubai Holding, which also owns luxury hotels group
Jumeirah, was one of the state-linked entities that borrowed heavily from banks
to fund growth and acquisitions during the boom years from 2006-08 and was hit
when a property bubble burst.
One of its other units, Dubai Group, completed the
restructuring of its $10 billion debt in January, one of the last major
hangovers from the emirate's financial crisis.
The holding is now reviving its growth plans with
chief executive Ahmad bin Byat saying the company would need $6.8 billion to
build "Mall of the World", an entertainment district that would
include the world's largest shopping mall.