DUBAI, MARCH 14 - A U.S.-based hedge fund said it has won a $45.5 million legal claim against Dubai’s Drydocks World for defaulting on a loan, putting the ship builder’s $2.2 billion debt restructuring in further trouble.
Monarch Alternative Capital said in an emailed statement that Drydocks, a unit of Dubai World DBWLD.UL, has been ordered to pay the entirety of the sum of $45.5 million claimed plus Monarch’s legal costs.
Monarch sued Drydocks last year in the High Court of London casting a blow to the restructuring talks.
A week ago, Drydocks proposed repaying creditors in five years and said it was seeking more working capital as it tried to restructure a $2.2 bln loan facility, ending lengthy and complex debt talks.
The restructuring had been scheduled to be completed by April 2011, but it was slowed by a lack of government support and opposition from hedge fund creditors, including Monarch.
When asked how the judgment would affect its restructuring Khamis Juma Buamim, Drydocks World chairman, said:
“As made clear at all lender meetings, the company is confident that it can still implement its restructuring if it transpires that Monarch do not accept the terms on offer.”
“But I would very much hope that notwithstanding their legal action Monarch will accept the very reasonable restructuring proposal.”
Drydocks World’s debts stem from a multibillion-dollar loan it took out to fund expansion in Singapore. Drydocks has its major ship and rig building facilities in southeast Asian countries such as Singapore and Indonesia.
The $2.2 billion facility, taken out in October 2008, comprised a $1.7 billion three-year loan paying 170 basis points and a five-year $500 million loan with a 190 basis point margin, according to Thomson Reuters data.
Presence of hedge funds is seen complicating debt restructurings in the Gulf Arab region, where previous negotiations have been bank-only affairs.
Another U.S. hedge fund manager Davidson Kempner Capital Management is part of the creditor committee for the $1.1 billion debt restructuring at Bahrain investment house Arcapita ARCAB.UL, the first time a fund has fulfilled such a role in the region.
($1 = 0.6355 British pounds)
(Additional reporting by Mirna Sleiman, Editing by Matt Smith, Dinesh Nair)
Corrects claim figure in lead and second paragraph to $45.5 million after Monarch Capital corrects statement