Dubai International Capital (DIC) is losing almost all of its 60 per cent stake in the UK's Alliance Medical in the diagnostic imaging company's takeover by banks.
Under a deal reached on Friday, DIC, the private equity arm of Dubai Holding, is to retain just 2.5 per cent of Alliance, the UK's largest provider of MRI and CT scan equipment to hospitals. DIC bought control of the company in 2007 in a transaction that valued it at £600 million (Dh3.48 billion).
"Following the successful restructurings of our core European portfolio companies Almatis, Doncasters, Mauser and Travelodge, we have now completed the last restructuring in our portfolio," a DIC spokesman said.
The deal ends a months-long battle between DIC and Alliance's creditors over how to resolve the company's financial struggles.
Ultimately, DIC decided not to pump in new money to keep up payments on about £570m of debt, opting instead to hand control over to creditors. Following the takeover, the banks have agreed to reduce Alliance's debt to £250m.
"This agreement brings to an end a period of uncertainty for the company and provides Alliance Medical with a secure and stable financial position that supports the long term future of the company," said Philippe Houssiau, Alliance's chief executive.
Alliance's new ownership structure has its main creditors - the UK's Lloyds, M&G Investments, an asset management firm, and Germany's Commerzbank - taking 85 per cent of the company. DIC and junior lenders are to get 2.5 per cent each, with Alliance management taking the remaining 10 per cent. The senior lenders have agreed to inject £60m to finance the company's growth.
The deal marks an end to a series of financial restructurings and battles for control at the companies DIC owns. Doncasters, a precision-engineered parts company in the UK, Travelodge, a UK budget hotel chain, and Mauser, a German industrial packaging firm, have all gone through restructurings in recent years.
DIC was also involved in a tense battle this year for control of Almatis, a German aluminium products company. It managed to retain 60 per cent of Almatis as part of a deal reached in August to take it out of bankruptcy in the US.
"Over the past two years we have invested $300m (Dh1.1bn) in our core European portfolio and will not hesitate to make additional investments where we perceive the opportunity for attractive returns," the DIC spokesman said. "We are focused on the future and on generating strong returns from our investments, which are all performing ahead of expectations."
DIC still faces numerous challenges, however, chief among them a $1.25bn loan that it is in talks with creditors to restructure. A repayment deadline passed at the end of last month without an extension so negotiations could progress.
Sources familiar with the talks say DIC and its banks are far from a final agreement but that any pact would be likely to include plans for the private equity firm to sell companies in its portfolio to pay down debt.
Meanwhile, DIC's parent company is undergoing a sweeping reorganisation. Several divisions of Dubai Holding are in discussions with creditors about extending repayment of debts.
Analysts estimate Dubai Holding's total debt load at about $10bn. That is less than half of the $24.9bn of debt that Dubai World, a government-owned conglomerate, reached an agreement with creditors to restructure earlier this year.