Dubai International Capital (DIC), the emirate's premier investment vehicle, has reached a deal with its main bankers to delay repaying debts of US$2.6 billion (Dh9.55bn) for three months. In a brief statement, the company said it and a "co-ordinating committee (Co-com) of banks presented a request to lenders for a three-month extension to September 30 of certain maturities.
"The extension period would allow the implementation of a consensual longer-term plan that would enable DIC to maximise the value of its business for the benefit of all its stakeholders," the statement said. Interest and amortisation payments would continue to be paid. An informed source said: "They have not defaulted. The loan does not come due till the end of (next) month. In the meantime, as part of the extension, they are still paying the interest on the same terms."
It also emerged that over the past year DIC has sold many of the high-profile public investments it made in the boom years between 2004 and 2008, acquired for as much as $1.5bn in total. Stakes in EADS, the maker of Airbus, the Japanese electronics giant Sony and the Indian bank ICICI were all sold after the financial crisis broke in 2008, an informed source said. The banks that have agreed to the deal are the British lenders HSBC, Royal Bank of Scotland and Lloyds, and the local banks Emirates NBD, Noor Islamic and Mashreqbank.
Total debts of DIC, an international private equity and asset management company, are believed to be about $2.6bn, of which $1.25bn is in the form of a loan from a syndicate of banks, due to be repaid next month. The company, part of the Dubai Holding conglomerate owned by Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai, has been one of the main agencies of the emirate's overseas investment policy since its foundation in 2004.
Most of that time it was under the executive control of Sameer al Ansari, who last year moved to head up the investment bank Shuaa Capital. Analysts expect the deal with bankers to be the prelude to a planned sell-off of some remaining assets, when the company, now run by Anand Krishnan, believes values are appropriate. These include stakes in the company that owns Madame Tussauds, the British engineer Doncasters, and a holding in the UAE luxury retailer Rivoli, among other local and international interests.
"This will not be a fire sale," the source said. "DIC is a private equity company and its job is to create value by buying and selling assets." The DIC move could be part of a wider capital reorganisation at Dubai Holding, its ultimate parent, which has appointed advisers to several parts of its operations. Dubai Holding Commercial Operations Group, the unit that owns the Tecom business parks, Jumeirah hospitality business, and the developer Dubai Property, is scheduled to produce delayed financial figures next week.
Lazard is advising DIC on the debt postponement proposals, while the banks are being advised by Deloittes. "This shows that more debt has to be restructured beyond Dubai World. Going forward, similar restructuring deals could be reached possibly into 2011," said John Sfakianakis, the chief economist at Banque Saudi Fransi in Riyadh. "It begs the question [of] how will this be handled given that investments have lost a lot of their market value and the pressures that lenders have to mitigate against. In light of Greece, debt is a very challenging topic, be it sovereign or corporate."
Jan Willem Plantagie, the regional manager at the ratings agency Standard & Poor's, said: "This sounds like a large-scale restructuring of the capital structure; one step in a general rethink of the overall review of the structure of Dubai Holding, of what the strategy is going to be and what the group is going to look like. firstname.lastname@example.org email@example.com