Drydocks World taps Citibank to advise on $2.3bn debt

Drydocks World has called in the American financial group Citibank to help it refinance its US$2.3 billion of debt.

DDW, under the chairmanship of Abdulrahman Al Saleh, the director general of the Dubai Department of Finance, has hired the restructuring advisers at Citi's Middle East unit, which is based in the emirate, to seek a better deal from its creditors.

The marine engineering group, part of the Dubai World conglomerate, sealed a deal in 2012 to push back maturities on $2.3bn in two tranches. It is believed Citi will be focusing on the $800 million of bank debt due for repayment in 2017. The rest matures in 2027.

A DDW spokesman declined to confirm the appointment, as did a spokesman for Citibank.

But a source close to the company said that the American bank had been retained to work on the refinancing, which has been the subject of speculation for the past few months.

An executive from a creditor bank also confirmed the appointment of Citi, although he declined to comment.

DDW believes the economic and financial climate – with Dubai's economy growing against a backdrop of historically low interest rates – provides an opportunity to refinance the debt on better terms than in 2012.

At that time, DDW became the first and only part of Dubai World to use the provisions of Decree 57, the emirate's bankruptcy law put in place to deal with the parent company's $25bn restructuring.

In recent trading updates, creditors have been told that the UAE business is operating satisfactorily. Some had feared a fall-off in the crucial work for oil services companies after the fall in crude prices.

There were challenging conditions, however, in DDW's South East Asian operations, creditors were told. Borrowing before the financial crisis to invest in yards in Indonesia was the main reason for the 2012 refinancing.