x Abu Dhabi, UAEWednesday 17 January 2018

Dubai World sells Gazeley in first step to lighten debt burden

Dubai World has sold one of its UK assets as part of its efforts to repay creditors.

The Republic Plaza Building, one of properties owned and managed by Brookfield Asset Management, in Denver, Colorado. Matthew Staver / Bloomberg News via Getty Images
The Republic Plaza Building, one of properties owned and managed by Brookfield Asset Management, in Denver, Colorado. Matthew Staver / Bloomberg News via Getty Images

Dubai World, the ports, hotels and industrial conglomerate, has taken a first step towards lightening its debt burden ahead of a US$4.5 billion repayment in 2015.

Economic Zones World (EZW), a subsidiary of the government-owned group, has sold a British logistics business, Gazeley, for an undisclosed sum.

The buyer is Brookfield Asset Management, a Canadian investor that has done business with Dubai before through a property partnership with Investment Corporation of Dubai.

A spokesman for Dubai World declined to comment on any aspect of the deal, but it is believed the sale had been some months in the making.

EZW is the 100 per cent-owned arm of Dubai World that runs Jebel Ali Free Zone (Jafza), the industrial area that includes the UAE's biggest port.

Last year Jafza refinanced $2bn worth of debt via the issuance of a 7-year sukuk for $650 million and $1.2bn of bank debt, as well as some repayments. It is believed the proceeds from the deal with Brookfield will go towards repayment of the bank borrowings over the 8-year life of the debt.

In the documentation that accompanied that refinancing, EZW pledged up to $300 million for Jafza from any sale proceeds of Gazeley.

Dubai World bought Gazeley, which develops logistics parks and warehouses around the world, for between $450m and $600m in 2008.

Rehan Akbar, a corporate finance analyst with the ratings agency Moody's Investor Services, which rates the Jafza sukuk, said there was little clarity on the transaction. "Compared to the entire debt stock, this is probably not a huge amount, but it shows they can realise asset values where appropriate."

Reuters quoted an unnamed banker with exposure to Dubai World debtas saying: "This particular asset was earmarked for sale and it's a positive indication that they have disposed of it.

"The big elephant in the room is still Dubai World and we would like to see more such deals coming out of them in the near future. There is a willingness to do it more than before and the general improvement in market conditions should help going forward."

Other assets owned by Dubai World are also for sale to help to meet total debt repayments of nearly $15bn by 2018. It is believed an offer has been made for the Fontainebleau Miami Beach Hotel in Florida.

Financiers believe Dubai World may also be considering the sale of some of the 80 per cent stake it still holds in the quoted ports company DP World.

Meanwhile, the Dubai Government's statistics centre said yesterday that growth in the emirate's GDP accelerated to 5.3 per cent year-on-year in the fourth quarter of last year.

A statement by the centre quoted its executive director, Arif Obaid Al Muhairi, as saying economic indicators suggested growth would rise further.

The centre did not give a growth rate for the third quarter, but in the first nine months of last year, GDP expanded 4.1 per cent from a year earlier.

GDP rose 4.4 per cent over the whole year, the centre said, after 4.3 per cent growth in 2011.

 

* with Reuters

fkane@thenational.ae