Dubai Drydocks’ $2.2bn loan deal unlikely in 2011

Reuters/Dubai

Ships are lined up at Drydocks World in Dubai. Dubai World’s shipbuilding unit is restructuring a $2.2bn facility taken in October 2008. The loan comprises a $1.7bn three-year loan and a five-year $500mn loan

Drydocks World, a unit of Dubai World, said a proposed $2.2bn loan deal with lenders expected to be completed by the end of April may not be reached this year. “Discussions (with banks) are still ongoing and it has not been completed yet,” Khamis Juma Buamim, chairman of Drydocks World told Reuters yesterday. “I can’t confirm if we will reach a restructuring agreement this year,” he added, when asked if he was confident an agreement would be struck before the loan comes due in November. Dubai World’s shipbuilding unit is restructuring a $2.2bn facility taken in October 2008. The loan comprises a $1.7bn three-year loan and a five-year $500mn loan. The Dubai-based ship and rig builder said earlier this year that it expected to complete the restructuring by April 30 and had agreed on the headline terms with banks. The talks with lenders are also aimed at making provisions for a new long term working capital facility. “Some points still need to be clarified with the banks,” Buamim said, declining to give more details. Bookrunners on the 15-lender syndicate were BNP Paribas, HSBC Mashraq, Standard Chartered and Lloyd TSB Bank among others. Dubai World, the Gulf emirate’s flagship conglomerate, which has itself restructured $25bn in debt, has said Drydocks World is not part of its own restructuring as it had sufficient financial capacity to service its own debt. Dubai was hit hard by the global financial crisis, which sent property prices slumping by more than 50% and forced several state-owned entities to restructure their debts. Limitless, a Dubai World real estate arm, has rolled over a $1.2bn loan owed to one syndicate of banks several times. “Drydocks restructuring will be a tough one to negotiate purely because of the mixture of lenders in the consortium,” a Dubai-based banking source said. The lenders include a number of foreign banks and the company is not finding it easy to push through the terms to them, said the source. “The loan is also actively traded in the secondary market and we have seen interest from the foreign banks to offload their positions,” he added. Drydocks World signed a new $200mn credit facility in January.Emirate to launch gas strategy in Q2 next yearDubai will launch a gas strategy next year aimed at reducing rising energy demand in the emirate and will tender to appoint a specialist consultant for the plan by year-end, its top energy council said yesterday. The emirate’s Integrated Gas Strategy 2030 will start in the second quarter of 2012, and “deals with pipelines of liquefied and natural gas combined with underground storage,” Saeed Mohamed al-Tayer, vice chairman of Dubai’s Supreme Council of Energy (SCE) said in a statement. The plan is part of Dubai’s Integrated Energy Strategy 2030 which aims to reduce energy demand and carbon dioxide emissions to 30% by 2030. The SCE is responsible for ensuring energy supplies in the emirate where increasing demand for cooling and desalinated water are major drivers for rapidly rising electricity use. Dubai is home to nearly 2mn people and used around 33,000 gigawatt hours (GWh) of electricity in 2010. AL-Tayer, who is also chief executive of Dubai Electricity and Water Authority (Dewa), said in June demand could increase by 7% this year.