Dubai : Dubai Holding Commercial Operations Group (DHCOG) is unlikely to restructure debt after posting a Dh23.5-billion loss as it benefits from hotels, rental and telecommunications businesses, JPMorgan Chase said yesterday.
The US bank is maintaining an "overweight" rating on DHCOG's bonds, Zafar Nazim, a London-based analyst at the bank, wrote in a report. The loss attributable to shareholders comes after a year-earlier profit of Dh10 billion, the company said on June 1.
"Cash generation from hotels and rental portfolio, value associated with Jumeirah and telecom stakes," should enable the company to refinance near-term debt, Nazim wrote. "We do not expect DHCOG to restructure its debt, unlike its sister entities, Dubai International Capital (DIC) and Dubai World," he said.
DIC, an investment unit of Dubai Holding with a $1.25-billion loan due in June, sought a three-month extension on some of its payments on May 27.
DHCOG, a real-estate and hospitality company, reported this week that impairment charges for the year almost tripled to Dh22.5 billion. The company's "liquidity appears tight" and it may have to "resort to additional borrowing, potentially from its parent Dubai Holding, to plug liquidity gap this year", JPMorgan said.
The company's $500-million floating-rate note due in February 2012 rose 0.5 cents to 78 cents on the dollar as of 6pm in Dubai, up from 77.5 cents on Wednesday, according to Bloomberg bond trader composite prices. The price has surged about 84 per cent since reaching a low on December 9.
DHCOG has about $4.08 billion of debt outstanding, according to JPMorgan. The company needs to roll over a $555 million loan maturing next month, the bank said.
Talks with banks
Damas in sight of deal
Damas International said yesterday it expects to reach a debt restructuring deal with lenders by the end of the month as it focuses on recovering assets from its founders.
Damas is in talks with banks to restructure $872 million (Dh3.2 billion) and is operating under a standstill agreement.
The lenders, some 20 banks, include foreign names like Barclays and BNP Paribas.
"The restructuring process is making good progress. Our target is end of June," Anan Fakhreddin, Damas' newly appointed chief executive, told the Reuters Global Luxury Summit.
"It covers the whole debt and breaks it down to three different groups, each under different terms and conditions."
— Reuters
