x Abu Dhabi, UAEMonday 22 January 2018

DP World back to markets

DP World plans to return to the international capital markets for up to US$3.25 billion fof debt financing, probably next year.

DP World's plan signals a renewed interest from Dubai companies to access the debt markets.
DP World's plan signals a renewed interest from Dubai companies to access the debt markets.

DP World, the ports and logistics company owned by the Government-related Dubai World, plans to return to the international capital markets for up to US$3.25 billion (Dh11.93bn) of debt financing, probably next year.

The company announced its intentions in an updated prospectus filed with the London Stock Exchange, where it is planning a listing for next spring.

The move signals a renewed appetite from Dubai companies to access the debt markets after the successful conclusion of negotiations for the restructuring of $24.9bn of debt by Dubai World, the property and transport conglomerate.

The Dubai Government also recently published an updated prospectus for $1.5bn of medium-term debt, the first time it has gone into the capital markets since the Dubai World crisis broke about a year ago.

The DP World prospectus contains updated financial statistics showing total assets of $18.5bn and debts of $8.03bn. Pre-tax profits at the end of last June amounted to $219.2 million, compared with $187.3m for the same period the year before.

The company, which is quoted on the NASDAQ Dubai exchange, originally told potential creditors in 2007 it wanted to raise up to $5bn of medium-term debt before its initial public offering on the Dubai market. About $1.75bn has already been drawn down from the facility.

A source familiar with the matter said the company's updated prospectus was necessary to enable DP World to meet regulatory requirements and to allow it to "move quickly and raise money in the appropriate circumstances".

The DP World finance director Yuvraj Narayan told investors recently the company would go back into the international capital markets next year to raise money to pay a $3bn syndicated loan facility that matures at the end of 2012.

"This is just a prudent bit of financial preparation," the informed source said.

The debt has been rated as "Ba1 (positive)" by Moody's Investors Service and as "BB" by Standard & Poor's, the prospectus said.

Concerning the "risk" factors associated with the debt issue, the prospectus tells investors: "Our ultimate majority shareholder, Dubai World, and the Government of Dubai have the ability to exert significant influence over us and their interests may conflict with yours or ours."

The document says the Dubai Government, through the 80.45 per cent stake it holds in DP World, may exert control over executives, business policies, financial matters (including increases or decreases of capital) and mergers, acquisitions and disposals of assets.

"Consequently, we cannot assure you that the resolution of any matter at a general meeting of the shareholders that may involve the interests of Dubai World or the Government of Dubai, as represented by Port & Free Zone World FZE [the legal holder of the DP World shares], will be resolved in what investors would consider to be in our or their best interests," it warns.

"As we are indirectly majority-owned by the Government of Dubai, we may be able to claim sovereign immunity. Although we have irrevocably waived this right, there is a risk that any judgments obtained in actions against us may not be enforceable in the Dubai International Financial Centre if the DIFC courts decide that such waiver is not legal or binding."

Earlier this year DP World postponed plans for the London listing, citing regulatory obstacles.

But it is committed to a London listing early next year, on the basis of financial statistics for this financial year that will be published in March.