Thursday, 27 May 2010
Dubai International Capital, the investment arm of conglomerate Dubai Holding, said Thursday it has asked lenders for a three-month extension on some of its debts, indicating the financial challenges still facing the city-state.
The news comes six months after Dubai's much larger conglomerate Dubai World shocked markets by announcing the need for a standstill on its debt pile. Last week, Dubai World said it has agreed in principle with its main creditors to restructure $23.5 billion of debt and that it will now seek a final deal with all its creditors by end June.
DIC said in a statement Thursday that the debt extension to Sep. 30 would allow it to implement a "consensual longer term plan" that would allow it to "maximise the value of its business for the benefit of all its stakeholders".
DIC has $2.6 billion of debt maturing by 2011, with $1.25 billion falling due next month, a banker familiar with the matter said Thursday.
DIC said it made the debt extension presentation to its lenders alongside a coordinating committee of banks.
The coordinating committee is co-chaired by HSBC Holdings PLC (HBC) and Emirates NBD PJSC (EMIRATES.DFM), the banker said.
Financial services firm Deloitte is advising DIC's lenders, another person familiar with the matter said.
Dubai Holding, which has overall debt of around $12 billion, is controlled by the emirate's ruler Sheikh Mohammed bin Rashid Al Maktoum.
Earlier in May, Dubai Holding's subsidiaries--Dubai Holding Commercial Operations, which oversees Dubai Holding's property, business-park and hospitality investments, including hotel operator Jumeirah; Dubai Group, which is one of Dubai Holding's investment arms; and DIC--all appointed financial advisers ahead of a potential debt restructuring, people familiar with the matter told Dow Jones Newswires at the time.
In April, German aluminium company Almatis--one of DIC's portfolio companies--filed for U.S. Chapter 11 bankruptcy protection.
The Chapter 11 process will be used to bring about a debt-for-equity swap that will lower Almatis' $1 billion debt to around $422 million and will see distressed debt investor, Oaktree Capital, take control of the company.
Under Oaktree's plan, DIC, subordinated-mezzanine and second-lien lenders would all see their investments wiped-out.
DIC has said it will "vigorously dispute" Oaktree's plan and is pursuing its refinancing plans of its own.