x Abu Dhabi, UAESunday 23 July 2017

DIC agrees $2.6bn deal with creditors

Debts to be rescheduled over 6 years, with chief investment officer to take over as chief executive in reshuffle at the top

Dubai International Capital (DIC) has agreed with its biggest creditor banks to restructure debts of US$2.6 billion (Dh9.55bn), according to a senior executive with a bank involved in the deal.

Creditors to the private equity group, part of Dubai Holding, were also reported to have agreed a shake-up at the top level of DIC, with David Smoot, the chief investment officer, taking over from Anand Krishnan as chief executive.

There was no confirmation of a deal from DIC, but a spokeswoman said: "DIC continues to make significant progress in its discussion with lenders regarding the restructuring of its liabilities and looks forward to updating the market shortly."

DIC is likely to reschedule its debts to repayment over six years at 2 per cent interest, similar to the terms of Dubai World's recent restructuring of its $24.9bn of liabilities.

One London analyst who declined to be identified said: "That's pretty generous to the lender, and it's a positive surprise."

According to a recent report by the US investment bank JP Morgan, DIC debt comprises a $1.25bn facility that was repayable last month but which was extended with creditors' agreement; and $550 million repayable in August 2012, which had a guarantee from Dubai Holding, the conglomerate owned by Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai.

The balance of some $800m is believed to be in the form of bilateral debt. The co-ordinating committee of banks in the negotiations is led by HSBC and Emirates NBD, with the investment bank Lazard advising DIC. DIC was one of the leading investment vehicles of the emirate before the credit crisis knocked its finances out of kilter. It has interests extending from the German medical equipment company Almatis to the UK hotel group Travelodge.

DIC is believed to be considering a sale of assets in the medium term to help pay down its debts, but it is reluctant to embark on an immediate asset sale because of low values.

The analyst said: "I would be a little cautious. The big lenders may have agreed, but they will have to get the agreement of the minority lenders. It's positive news for the company, but a final deal could still be three to six months away.

"We need to see a lot more detail. For example, the section of the debts covered by the guarantee should get better treatment than the unguaranteed liabilities."

If DIC wins overall approval for the restructuring, it will be another milestone in Dubai's financial recovery. Other parts of Dubai Holding are also in talks with creditors. Dubai Financial Group, the arm of Dubai Holding that owns stakes in some of the emirate's biggest banks and other investment interests, is also talking to creditors about liabilities amounting to at least $4bn.