x Abu Dhabi, UAESaturday 22 July 2017

Creditors turn $555m Dubai Holding debt into new loan

Dubai Holding Commercial Operations Group has five years to pay off new loan.

The lobby of the Burj al Arab hotel, which is owned by the Dubai Holding Commercial Operations Group.
The lobby of the Burj al Arab hotel, which is owned by the Dubai Holding Commercial Operations Group.

Dubai and its government-linked companies have notched another in a series of financial restructurings, with a division of Dubai Holding agreeing with creditors to convert US$555 million (Dh2.03 billion) of debt into a new five-year loan.

Dubai Holding Commercial Operations Group (DHCOG), a unit of Dubai Holding that owns the Burj Al Arab hotel and the free-zones operator TECOM, reached the accord after months of negotiations with banks. The deal was announced in an e-mail late on Thursday. Dubai Holding is owned by Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai.

The $555m revolving loan was originally due last July. With banks reluctant to refinance after the global financial crisis and DHCOG short of cash to repay the debt on schedule, however, the division received a two-month repayment extension as talks began about a restructuring. DHCOG lost about $6.2bn in 2009.

Another two-month extension followed in September as DHCOG's talks with banks dragged on. The company obtained a third extension, until the end of last month, to settle on the final terms of the restructuring.

Dubai Holding has received about $2bn of assistance from the Dubai Government, officials said in November. That aid is helping the company and its subsidiaries make good on financial obligations as talks about extending debt maturities progress.

Alongside DHCOG, the conglomerate's two other divisions have also been in discussions with banks recently about altering terms on debt. Dubai International Capital, a private-equity arm, signed a pact last month with its creditors to move ahead with a $2.6bn debt restructuring. Dubai Group, a financial arm, is also understood to be working on a restructuring.

The turmoil at Dubai Holding, which has total debts of more than $9bn, follows the resolution last year of similar issues at Dubai World, a government-owned group that holds the property developer Nakheel and the ports operator DP World.

Dubai World finalised a $24.9bn debt restructuring in September, paving the way for other government-linked companies to seek new debt terms of their own.

The new DHCOG loan was arranged by Citigroup, Royal Bank of Scotland and Standard Chartered. DHCOG did not reveal the interest rate on the loan or details on any plans to sell assets to repay the debt.