Sunday 3 October 2010

DIC creditors seek better terms

Creditors of Dubai International Capital (DIC), an arm of the government-owned conglomerate Dubai Holding, are demanding more stringent terms on the extension of a US$1.25 billion (Dh4.59bn) loan that originally came due in June. The two sides are understood to be some way from reaching a final settlement on the loan, a deal seen as a key step towards restoring order to Dubai's finances after Dubai Worldreached a pact last month to restructure about $24.9bn of debt.

The acceptance of the Dubai World deal by 99 per cent of the government-owned group's bank creditors gave a boost to local stock markets and sent down the cost of insuring Dubai debt against default. It also laid the groundwork for Dubai's sale last week of $1.25bn of government debt, its first round of fund-raising since Dubai World said it would seek a standstill on debt repayments in November. The debts of DIC and Dubai Holding have now begun to take centre stage as confidence in the emirate's economic recovery begins to take hold.

DIC is a private equity group that owns stakes in companies including the UK budget hotel chain Travelodge and a minority stake in EADS, Europe's largest aerospace group. A source familiar with the talks said DIC was pushing for a new five-year loan with an interest rate based on the London interbank offered rate (Libor) plus 0.85 percentage points. But creditors are understood to want much higher interest rates, according to observers, plus asset sale tests in the second and fourth years of the new five-year loan.

No comments:

Post a Comment