A unit of Dubai Holding, the investment vehicle of the emirate's ruler, has mandated banks to raise a syndicated loan, with two banking sources saying the facility would be worth AED4 billion ($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 will be provided to the parent company, another source said.
TECOM said in a statement to Reuters in September that 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.
The company has mandated Citi, Dubai Islamic Bank , Mashreq, Abu Dhabi Commercial Bank and Noor Bankas arrangers, two sources with direct knowledge of the deal said this week.
The loan will have a lifespan of between seven and eight years and will have an amortising structure, the sources 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 Dubai Media City and Dubai Internet City. This month it said it would create a new zone for the technology, new media, smart education and scientific industries, planning to spend 4.5 billion dirhams ($1.2 billion) on such inititiaves.
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 in 2006-08, and was hit when a property bubble burst.
One of its other units, Dubai Group, completed the restructuring of $10 billion of debt in January, one of the last major hangovers from the emirate's financial crisis.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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