A US-based hedge fund said it has won a US$45.5m legal claim against Dubai's Drydocks World for defaulting on a loan, putting the ship builder's US$2.2bn debt restructuring in further trouble .
Monarch Alternative Capital said in an emailed statement that Drydocks, a unit of Dubai World, has been ordered to pay the entirety of the sum of US$45.5m claimed plus Monarch's legal costs.
Monarch sued Drydocks last year in the High Court of London casting a blow to the restructuring talks.
A week ago, Drydocks proposed repaying creditors in five years and said it was seeking more working capital as it tried to restructure a US$2.2bn loan facility, ending lengthy and complex debt talks.
The restructuring had been scheduled to be completed by April 2011, but it was slowed by a lack of government support and opposition from hedge fund creditors, including Monarch.
When asked how the judgment would affect its restructuring Khamis Juma Buamim, Drydocks World chairman, said: "As made clear at all lender meetings, the company is confident that it can still implement its restructuring if it transpires that Monarch do not accept the terms on offer."
"But I would very much hope that notwithstanding their legal action Monarch will accept the very reasonable restructuring proposal."
Drydocks World's debts stem from a multibillion-dollar loan it took out to fund expansion in Singapore. Drydocks has its major ship and rig building facilities in southeast Asian countries such as Singapore and Indonesia.
The US$2.2bn facility, taken out 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 point margin, according to Thomson Reuters data.
Bookrunners on the 15-lender syndicate were BNP Paribas , HSBC, Mashreq, Standard Chartered and Lloyds Banking Group among others.
Presence of hedge funds is seen complicating debt restructurings in the Gulf Arab region, where previous negotiations have been bank-only affairs.
Another US hedge fund manager Davidson Kempner Capital Management is part of the creditor committee for the US$1.1bn debt restructuring at Bahrain investment house Arcapita , the first time a fund has fulfilled such a role in the region.
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