x Abu Dhabi, UAEWednesday 26 July 2017

Drydocks World on target to agree to new terms for $2bn loan

Drydocks World, a ship repair company owned by Dubai World, is set to agree to new terms on $2.2 billion of debt, offering a much-needed fillip to other Dubai companies that face billions of dollars of refinancing this year.

Drydocks World, a ship repair company owned by Dubai World, is set to agree to new terms on US$2.2 billion (Dh8.08bn) of debt, offering a much-needed fillip to other Dubai companies that face billions of dollars of refinancing this year.

Adding to the optimism, Dubai Electricity and Water Authority (Dewa) also announced yesterday it would repay Dh1.2bn of debt this year ahead of its maturity date.

Khamis Juma Buamim, the chairman of Drydocks, yesterday said the company aimed for a completion date of "all aspects of its restructuring" by July, having first started talks with lenders late last year.

He will present a detailed proposal to lenders on Thursday, setting out the steps required to manage the new debt and a timetable for paying it back.

"With the support of its wider stakeholders, significant progress has been made over recent months in all aspects of the restructuring," the company said. "As a result, Drydocks can … announce that it is confident that it will receive the support of a majority of its syndicated lenders to the terms of its debt restructuring."

Saeed Mohammed Al Tayer, the chief executive of Dewa, told Reuters yesterday the utility would repay its debt ahead of schedule.

Empower, one of the largest district cooling companies in Dubai, this week also said it was confident it could raise Dh500m from banks this year for expansion.

Despite the positive rhetoric, consensus remains that Dubai's refinancing needs this year are large and are made more worrying given the weakened lending environment globally due to the European sovereign debt crisis.

The IMF, Bank of America Merrill Lynch and ratings agencies estimate repayments or refinancings of about $15bn this year.

The emirate's total debt load after the Dubai World restructuring is $119.8bn, according to a Merrill report. Two of the largest debt deals maturing this year are the Jebel Ali Free Zone's $2bn Islamic bond, which is due in November, and a $1.25bn sukuk from DIFC Investments in June.

Corporations often look to refinance their debts with new loans when the old ones are due, rather than pay back the borrowed principal in full.

Drydocks World is seeking to restructure two bank loans that were issued in 2008, one worth $1.7bn and the other $500m.

The $1.7bn loan came due in October, and the $500m loan matures next year.

But the uncertain refinancing landscape is not exclusive to Dubai.

Al Jaber Group, one of Abu Dhabi's most prominent family conglomerates, is also close to refinancing up to Dh3bn in loans with a consortium of banks, it was reported last week.

rjones@thenational.ae