Dubai: State-backed Dubai Ports World, which is borrowing $6.5 billion to fund its takeover of UK ports and ferries group P&O, received commitments of over $14 billion by its close yesterday, an industry source told Gulf News.
Helped by the strong response, DP World now plans to reduce the price of the five-year syndicated term loan, the biggest ever to come out of the Middle East, to 100 basis points over Libor from 125, the official added.
"There has been a very good response from both Middle East and international banks and the company hopes that the banks will agree to the revised pricing considering the strong book," he said.
Formal commitments and documentation for the loan, for which Barclays Capital and Deutsche Bank are the lead arrangers, will be completed next week.
The loan will be used to fund the $6.8 billion bid Dubai Ports made for the Peninsular and Oriental Steam Navigation Co., that will create the world's third largest ports group. It will also be partly used to refinance another $1.65 billion loan DP World raised last year.
"There was some negative publicity, but I suppose it was publicity nevertheless," the official said, referring to the controversy over the takeover of six US ports, that P&O owns, by DP World.
The contribution of US assets to P&O's operating profit is negligible and the loan's success reflects the strong creditworthiness of DP World and the Dubai government, he said.
The acquisition has been mired in controversy over possible security risks due to the operation of six US ports, that P&O owns, by a Middle Eastern company. The controversy has forced DP World to decide to divest its US assets.
The $6.5 billion term loan is also the second big borrowing programme that the group has carried out this year.
In January, DP World's parent, Ports, Customs and Free Zone Corporation, issued the biggest ever Islamic bond that raised $3.5 billion. That sukuk is linked to a possible IPO of a PCFC group company before the end of 2007.
