Drydocks eyes repaying $2.2bn debt in 5 years
Dubai, March 9, 2012
Shipbuilder Drydocks World, a unit of Dubai World, has proposed repaying creditors in five years and is seeking more working capital as it tries to restructure a $2.2 billion loan facility, ending lengthy and complex debt talks.
Chairman Khamis Juma Buamim, speaking after Drydocks had presented its plan to creditors from 25 institutions, said he expects banks to respond in a few weeks, and it was too early to say whether they would take losses against their positions.
"It’s a five-year debt deal," Buamim told reporters.
Asked whether the plan involved a haircut for banks, he said: "It's too early to talk about that." "It is positive ... (I) think we'll have majority potential.
But we still have to wait for lenders to digest the proposal," he said. "There will be working capital involved. We have not identified details of this."
"We already have a working capital facility ... It is a continuation of what we agreed a year ago," Buamim said.
The shipbuilding unit of Dubai's flagship conglomerate has seen its restructuring, initially scheduled to be completed last April, drag on as a lack of government support and hedge fund creditors curbed prospects for a speedy, amicable deal.
"We continue to pay interest on the loan, and we never stopped," Buamim said, adding that the rate was similar to market rates.
The company said in a statement that it outlined the major terms of its debt restructuring last week to its coordinating bank groups and launched its restructuring proposal at a meeting of all its lenders on Thursday.
The company said it had won contracts totalling $255 million this year.
Drydocks World's debts stem from a multibillion-dollar loan it took out to fund expansion in Singapore. Drydocks has its major ship and rig building facilities in southeast Asian countries such as Singapore and Indonesia.
The $2.2 billion facility, taken out in October 2008, comprised a $1.7 billion three-year loan paying 170 basis points and a five-year $500 million loan with a 190 basis point margin, according to Thomson Reuters data.
Bookrunners on the 15-lender syndicate were BNP Paribas , HSBC, Mashreq, Standard Chartered and Lloyds Banking Group among others. The firm wants a restructuring deal that extends debt repayments for five years.
The proposed timeframe would be similar to the $25 billion restructuring deal reached by parent Dubai World with its creditors, which extended its debt repayments through new five and eight-year facilities with reduced margins.
Dubai was hit hard by the global financial crisis, which sent its property prices tumbling more than 50 percent and forced several state-owned entities to restructure their debts. – Reuters