UPDATE 3-Dubai dealt new blow with DIC debt delay

* Dubai private equity arm seeks debt delay

* Troubles mount for second Dubai flagship conglomerate

(Adds Tabreed restructuring, details)

By Tamara Walid and Nicolas Parasie

DUBAI, May 27 (BestGrowthStock) – Dubai International Capital (DIC),
the private equity unit of the emirate’s flagship conglomerate
Dubai Holding, sought a three-month debt repayment delay on
Thursday in another blow to the emirate’s financial image.

“Dubai International Capital and a coordinating committee of
banks today presented to lenders a request for a three-month
extension to 30 Sep 2010 of certain maturities,” the company
said in a statement.

The DIC investment unit has a $1.25 billion loan maturing in
June, according to Reuters data, and DIC has $2.6 billion in
debt overall, according to a source familiar with the matter.

The new delay from one of the myriad of firms known as Dubai
Inc comes in the wake of the emirate’s shock request last
November to delay repayments on $26 billion of debt linked to
Dubai World and its property units, which put global markets in
a tailspin and heightened investors’ fears about sovereign and
sovereign-linked issuers.

It also showed the cash-strapped emirate still has some way
to go before returning to financial health, after the November
debacle dented Dubai’s image as a glitzy seaside haven for the
rich and famous.

“The point is that from the investor side this is not over,”
Saud Masud, senior real estate analyst at bank UBS.

“Dubai Holding is not the last one; I wouldn’t leave out Abu
Dhabi just yet … It’s not just Dubai’s but the whole of the
UAE’s exposure to the real estate sector.”

Robert McKinnon, chief investment officer at ASAS Capital,
said: “DIC is a little opaque. There’s a lot of need for more
capital in the system and Dubai World was not the end of the

“We will probably see more restructuring of Dubai entities,
but on a smaller scale than Dubai World and I don’t think this
announcement will be a catalyst for a new market crash.”

Separately on Thursday, Dubai-listed cooling company Tabreed
(TABR.DU: ) said it is in talks with banks to restructure $1.47
billion in debt and aims to raise $1.14 billion in new capital,
according to its chief financial officer.


Speculation that Dubai Holding [DUBAHC.UL] had also been
badly hit by the financial crisis that badly damaged Dubai’s
property market intensified in April, when one of it’s units
DHCOG delayed its 2009 results.

Trading in its Islamic bond, listed on Nasdaq Dubai, was
then halted on May 2. The delay was extended on May 16, with
DHCOG citing complexities in consolidating results of its units.

DIC’s parent Dubai Holding, which spans financial
investments, hospitality and real estate and is owned by the
emirate’s ruler Sheikh Mohammed bin Rashid Al Maktoum, is
thought to have around $15 billion in debt, according to

“DIC is more of a holding company and it holds a lot of
illiquid assets and my guess would be that it is having
difficulty offloading some of these assets,” said McKinnon.

Earlier in May Dubai World [DBWLD.UL] reached a deal to
restructure $23.5 billion of debt with its core lenders,
addressing the most immediate of a string of problems facing
investors in Dubai. [ID:nLDE64J06Z]

“Dubai World’s restructuring was effectively buying more
time for it to work through its issues and it seems the same
thing is happening with DIC,” McKinnon said.

DIC said the extension period to Sept. 30 would allow for
the implementation of a “consensual longer-term plan”, enabling
DIC to maximise the value of its business for its stakeholders.

Dubai Holding holds a substantial portfolio of brands in the
property and hospitality sectors, organised under three main
groupings: Dubai Holding Commercial Operations Group (DHCOG)
[DUBAHC.UL], Dubai International Capital and Dubai Group.

On Tuesday Dubai Bank, another subsidiary of Dubai Holding,
said following a credit rating downgrade by Fitch it was
reviewing its strategy and business model to cope with the
difficult market environment. [ID:nLDE64O214]

HSBC was bookrunner and agent for DIC’s $1.25 billion June
loan, with Bank Of Tokyo Mitsubishi-UFG (8306.T: ), Emirates Bank,
Emirates NBD (ENBD.DU: ), Lloyds (LLOY.L: ) and Sumitomo Mitsui
(8316.T: ) as mandatory arrangers for the loan.

Investing Basics

(Additional reporting by Dinesh Nair, Matt Smith and Rachna
Uppal in Dubai, with Carolyn Cohn and Sujata Rao-Coverley in
London; Writing by Thomas Atkins; Editing by Greg Mahlich and
David Holmes)

UPDATE 3-Dubai dealt new blow with DIC debt delay