Drydocks World, a shipbuilding and repair company that is part of the Dubai World conglomerate, is in talks to restructure US$1.7 billion (Dh6.24bn) of loans amid a major management reshuffle that has also seen the departure of Sultan bin Sulayem as chairman. Mr bin Sulayem oversaw the international expansion of Drydocks World during the boom years of the shipping industry between 2004 and 2008.
The new chairman of Drydocks and Maritime World, which owns Drydocks World, is Khamis Bu Amim, Dubai World officials confirmed yesterday. Drydocks and Maritime World is, in turn, owned by the Dubai World conglomerate. Mr Bu Amim is also chief executive of the Regional Clean Sea Organisation and had a 25-year career in the oil and gas business with ConocoPhillips and its local affiliate, Dubai Petroleum Company.
The new Drydocks World board comprises the company's chief executive, Geoff Taylor, Hamed Mohammad bin Lahej, Ahmad Eisa Hareb al Falahi and Khalid Ahmad bin Tirkiyahhas. Mr Taylor said on Monday that Drydocks World was in talks with banks to restructure $1.7bn of debt maturing in November next year. "We are going through a process of discussions with the banks to restructure our $1.7bn loan … Obviously the market changes which occurred significantly slowed down our ability to meet our original schedules," he said, adding that the company was also undergoing restructuring.
Drydocks World, although part of Dubai World, is not included in the conglomerate's debt restructuring. Dubai World reached a deal with its core lenders to restructure $23.5bn of debt last month. Drydocks World is projecting revenue of $2bn this year, with South East Asia and the Middle East expected to generate about $850m each, Mr Taylor said. It is also looking to increase its 5,600 workforce in Batam by at least 1,000 workers this year.
Orders being placed with oil rig makers and shipbuilders plunged last year as tumbling oil prices forced oil and gas explorers to delay or cancel orders placed in the boom years. Some analysts turned positive on the sector, after an increase in oil prices and hopes of big rig building contracts from the Brazilian state energy company Petrobras. But an oversupply of ships, because of heavy orders placed before the financial crisis, and uncertainty about economic recovery are limiting capital expenditure in shipping and energy.
This year was expected to be relatively tough, Mr Taylor said. While Drydocks World and its competitors survived last year on the strength of orders won in 2008, the forward ordering that carried the order books through is beginning to wear thin, he said, but he did see signs of a pick-up in the industry. The company, which has its major ship and rig building facilities in South East Asia, did not receive any orders for 17 months until December last year, Mr Taylor said.
"Between December and now we picked up in the region of $400m worth of work," he said, adding the market was improving, particularly offshore, but had not been helped by the oil spill in the Gulf of Mexico. "We've yet to see what consequences that is going to have." Drydocks World has one yard in Singapore and three in the nearby Indonesian island of Batam, and has 14 offshore supply vessels under construction. It competes in the region with the world's top rigbuilders Keppel and Sembcorp Marine. Last week, it was revealed that Drydocks World was suing a Singaporean tycoon who sold the company the shipyard in the city-state for alleged breach of the sale contract. The company said Tan Boy Tee agreed not to compete with it over ship repairs and related industries when he sold Labroy Marine, but recently bought and sold another maritime company.
* with Reuters igale@thenational.ae
