Dubai: Banks Thursday agreed to a two-month extension of $555 million revolving credit facility to the Dubai Holding Commercial Operations Group (DHCOG), the real estate and hospitality arm of Dubai Holding.
"Dubai Holding Commercial Operations Group confirms that all parties have agreed to extend the existing Revolving Credit Facility [RCF] of $555 million under commercial terms for an additional two months," the company said in a regulatory filing to the Nasdaq Dubai yesterday where its medium term notes are listed.
Bankers familiar with the situation said it is a normal credit extension purely on commercial terms that was agreeable to all parties and does not imply the company is seeking a debt restructuring. "The extension is required to facilitate the finalisation of the documentation to renew the facility," the company statement said.
"The group is seeking to roll over some of its credit facilities under new terms. The credit extension is to facilitate time for the company and lending banks to finalise the terms of the rollover," said a senior banker. The group and its parent together have a reported $12 billion debt obligations.
DHCOG suffered a total loss of $23.56 billion in the year ended December 31, 2009, including the Dh22.5 billion impairment charges, compared to a net profit of Dh10 billion in 2008.
"The $555 million two-month (credit extension) facility for an entity that lost around that much each month last year looks like a lifeline before it realigned its finances," said Daniel Brody, chief of investment at SilkInvest.
The group carried out a major re-alignment of its business during 2009, including the consolidation of its real estate businesses, Sama Dubai, Tatweer Dubai and Dubai Properties Group. It said last month it has undertaken a rigorous internal organisational re-alignment of various subsidiaries. Dubai International Capital, an investment unit of Dubai Holding with a $1.25 billion loan due in June, had sought a three-month extension on some of its payments on May 27.
Meeting obligations
"As a result of the measures we took in 2009, DHCOG is well placed to meet its financial obligations in 2010. There is no need to restructure outstanding debt as discussions are taking place with banks to roll over our existing facilities at commercial terms," said Ahmad Bin Byat, Chief Executive of Dubai Holding in a statement to Nasdaq Dubai on June 1.
DHCOG's total assets were down to Dh124.5 billion last year compared to Dh171.4 billion in 2008. Analysts said the impairment was pretty huge resulting in an almost 20 per cent decline in the group's asset value and the outlook remains tough. Credit rating agency Moody's on June 30 downgraded DHCOG to B2 in its highly speculative category of ratings.
