DDW debt deal by March 2012

Drydocks World, a unit of Dubai World, expects to complete its long-delayed debt restructuring by the end of March 2012 and hopes joint ventures in Asia will provide it with much needed finance, its chairman said on Tuesday.

The shipping firm is looking to extend debt repayments for between five and eight years, Khamis Juma Buamim said. That timeframe would be similar to the restructuring deal reached by parent Dubai World with its creditors last year.

“We are not asking for government support. I’m not saying we don’t need it. There are always other avenues to get support,” Buamim told reporters on the sidelines of an event in Dubai.

The shipbuilding unit of Dubai World is not regarded as a strategic asset by Dubai, meaning it has had to negotiate its own debt solution.

It is eyeing joint ventures for its southeast Asia business, Buamim said, which could be sold off later to prospective partners if they proved to be successful.

“We are having a lot of discussion on this. International companies came forward for a joint venture. We are very hopeful,” he said. "The (ship) yards would be owned by us initially but if it's successful they would want ownership rights.”

But he said the company would not want to sell a majority stake in the operations.

Buamim said he expected the company’s profits to grow by about 15 per cent next year.

DEBT DEAL BY MARCH

Drydocks World’s debts stem from a multibillion-dollar loan which it took out to fund its 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 points margin, according to Thomson Reuters data.

The firm is now hoping to have a restructuring deal in place by the end of March, with debt repayments extended for between five and eight years, Buamim said.

"We are looking at continuing on the interest (payments) we have previously agreed on," he added.

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.

As part of the agreement, Dubai World got $9.3 billion of new capital from the Dubai authorities to assist its restructuring.

Drydocks World's restructuring has been going on for a number of months. Buamim told Reuters in August that a deal would not be reached this year, having initially targeted April 2011 for the agreement.

Chavan Bhogaita, head of the markets strategy unit at National Bank of Abu Dhabi, said a Drydocks debt deal by March would be positive for the emirate, already under scrutiny over looming high-profile debt maturities in 2012.

Dubai was hit hard by the global financial crisis, which sent property prices slumping by more than 50 percent and forced several state-owned entities to restructure their debts.

"Investors may also be looking to the Drydocks situation as a barometer by which to gauge the banks' willingness to cooperate with Dubai Inc entities...," Bhogaita said.

Negotiations have been complicated by the presence of hedge funds in the Drydocks negotiating group, with one New York-based distressed debt investor, Monarch Alternative Capital LP, launching legal action in a London court seeking claims of $45.5 million in October.

Buamim said Monarch is asking for a summary judgement in the case.

Talks with syndicate banks are also ongoing to secure a working capital facility, Buamim said. Drydocks agreed a $200 million credit facility with banks in January.

Bookrunners on the original 15-lender syndicate were BNP Paribas, HSBC Mashreq, Standard Chartered and Lloyds TSB Bank among others.

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