(Reuters) – Dubai International Capital (DIC) has asked creditors for a further delay in repaying a $1.25 billion loan until the end of November, two people familiar with the situation said.
The private equity arm of the investment vehicle owned by the ruler of Dubai, also presented an outline of a debt restructuring plan that includes asset sales over a period of five to seven years, one of the two people said. DIC, part of Dubai Holding [DUBAHC.UL], has around $2.6 billion in debt.
DIC’s spending spree during the boom years nabbed it a series of high profile overseas assets such as UK hotel chain Travelodge, Doncasters and Madame Tussauds, which has been sold recently.
“Everything is on the table but it won’t be a fire sale,” said one of the two people familiar with the situation.
Dubai World [DBWLD.UL], one of two other state-linked businesses, plans to sell its prized assets over a period of eight years to pay off creditors, according to the restructuring proposal document obtained by Reuters.
It said in the document asset disposals over an eight-year period will help generate up to a maximum of $19.4 billion, while similar sales based on current prices would be worth a maximum of $10.4 billion.
“They (DIC) are buying some time because markets go in cycles and currently assets are stressed and below their value,” said Haissam Arabi, chief executive and fund manager at Gulfmena Alternative Investments.
“We are on our way to reach a new cycle as soon as the fourth quarter…when we will see valuations and share prices expanding,” he said.
DIC had already extended the $1.25 billion loan, which matured in June, to Sept. 30. [ID:nLDE64Q1PJ]
“The reason (for the delay) is to give more time to implement the restructuring plan,” the other source said.
The overall debt burden of the emirate’s state-linked companies has been a growing concern to local and international investors, especially after Dubai announced a standstill on repaying $26 billion in debt as it restructured conglomerate Dubai World [DBWLD.UL].
Dubai Holding, one of the emirate’s three state-linked firms along Dubai World and Investment Corporation of Dubai, has debt obligations estimated at nearly $15 billion out of a total of $109 billion owed by the government of Dubai and related entities.
UK bank HSBC (HSBA.L: Quote, Profile, Research, Stock Buzz) and local lender Emirates NBD (ENBD.DU: Quote, Profile, Research, Stock Buzz) are co-chairing the committee leading the talks between creditors and the company.
Investment bank Lazard is advising DIC, the person added.
The extension follows an announcement from Dubai Holding unit Dubai Holding Commercial Operations Group (DHCOG), which on Sept 7 delayed repayment on a $555 million loan until Nov. 30. [ID:nLDE68609O]
Neither Dubai Holding nor DIC were immediately available to comment.
On Sept. 10, Dubai World reached a deal with 99 percent of its creditors to restructure nearly $25 billion in debt. [ID:nLDE6890IT]
By Nicolas Parasie
(Editing by Andrew Callus and Louise Heavens)