Dubai World, the transport and real estate conglomerate owned by the government of Dubai, is seeking to boost its financial resources with a US$1.2 billion syndicated loan through three of the biggest banks in the UAE.
The cash – which could come through to the Dubai World books in the second quarter – would help the group meet various commitments falling due at the group and subsidiary levels in the course of the year.
A spokesman for Dubai World declined to comment on reports that the loan, arranged through its wholly owned subsidiary, Ports & Free Zone World, would be used to help repay debts from the parent company. He said the loan was “a standard corporate transaction”.
Under a deal struck with creditors last month, Dubai World will repay $2.92bn of debt early, ahead of a September maturity deadline. In exchange, creditors have agreed to roll over $10.6bn of debt due in 2018 for another four years.
Some analysts were surprised that Dubai World needed to borrow $1.2bn now. Last November, it struck a deal with its 80 per cent-owned subsidiary DP World in which the global ports group took over the Jebel Ali Free Zone (Jafza) for $2.6bn in cash.
With DP World also taking on $859m of Jafza debt, that meant Dubai World’s balance sheet was nearly $3.5bn better off, and able to meet the early repayment.
One financial analyst said: “Maybe they are waiting for the Jafza cash to come through. The new borrowing facility via PFZW could just be an opportunistic loan taken out while lenders have liquidity.”
The three banks arranging the new loan are believed to be HSBC, Citigroup and Emirates NBD. It is thought to be a five- year facility, although none of the banks said to be involved would give details.
Dubai World is using Decree 57, the emirate’s special bankruptcy provisions, to get unanimous agreement on new repayment terms for a total of $14.6bn of debts. About 70 per cent of creditors have agreed to the new terms, said Mark Hyde, a lawyer representing Dubai World in the negotiations.
fkane@thenational.ae
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