After near default sparked Growthpoint V&A coup, Dubai World respectable again

In 2011, SA’s largest listed property group R69bn market cap Growthpoint and the public sector pension manager PIC, pulled off a coup by acquiring Cape Town’s V&A Waterfront from embattled Dubai World. At the time, the Middle Eastern SOE was still on the brink after over-extending ahead of the Global Financial Crisis. But the Dubai State-owned conglomerate has shed the bulk of a $100bn debt burden and creditors look likely to give the final approval to its rehabilitation in the month. Growthpoint shareholders will be delighted at their management’s boldness when opportunity knocked. – AH  

By Samuel Potter, Stefania Bianchi and Matthew Martin

Property Dubai(Bloomberg) — Dubai World, the state-owned company that roiled global markets with a near-default in 2009, may complete its reorganization of about $14.6 billion of debt in as soon as four weeks after all creditors agreed to the plan.

Clifford Chance LLP, the law firm representing Dubai World, yesterday applied to withdraw a court application under Decree 57 that would have allowed the company to force the new terms onto dissenting lenders with at least two-thirds support. The court was adjourned until May and will approve the application when the final debt deal is signed. That may take between four and six weeks, according to Robin Abraham, the Dubai-based managing partner of Clifford Chance in the Middle East.

Dubai and its companies accumulated more than $100 billion of debt as the emirate sought to transform itself into the Gulf Cooperation Council’s trade, tourism and financial services hub. Dubai World, which owns stakes in port operator DP World Ltd. and shipyard Drydocks World LLC, was one of several companies in the sheikhdom to delay debt payments when credit markets froze and asset prices slumped during the financial crisis.

“Investors are more confident this time around as asset valuations have been improving, the Dubai economy has been improving, and that’s reassuring them that they will get their money back,” Apostolos Bantis, a Dubai-based credit analyst at Commerzbank AG, said by phone yesterday. “It makes more sense for creditors to rollover than to try and make the process more complicated by holding out when their chances of achieving anything are very low.”

All creditors to the company have signed so-called lock-up agreements, which require them to support the deal to amend and extend the terms of the debt, Abraham told reporters after the hearing yesterday.

Deal Terms

The terms of the agreement are for full, early prepayment of 2015 maturities of $2.92 billion, the extension of 2018 maturities to 2022, increased pricing, the introduction of amortization targets, and additional collateral, Dubai World said in a statement yesterday. The company previously had consent from 73 percent of its creditors to the terms, it said at a court hearing in January.

“Having 100 percent support of creditors is definitely positive and was to be expected in our view,” Jaap Meijer, the Dubai-based managing director of research at Arqaam Capital Ltd., said by phone on Sunday. “The new terms bring the loans up to commercial rates and extend the tenor, so we don’t see any reason why banks would object.”

Shares in DP World, which trades on Nasdaq Dubai, rose 2.5 percent to $21 yesterday, the biggest increase since Dec. 17. The Dubai government’s bonds trade between Monday and Friday. – BLOOMBERG

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