Dubai shipyard firm looks to joint ventures

[December 20, 2011]  DUBAI, United Arab Emirates (AP) -- The head of Dubai's state-run shipbuilding company said Tuesday the firm is in talks with potential partners about sharing control of some of its Asian businesses.

The joint venture partnerships could be a way for DryDocks World, a division of troubled state conglomerate Dubai World, to generate extra cash as it looks to close a $2.2 billion debt restructuring process hanging over the company.

DryDocks World Chairman Khamis Juma Buamim told reporters he hopes to have a deal in place with lenders on the drawn-out restructuring by March.

DryDocks World operates the Middle East's largest shipyard in Dubai, where it builds and repairs ships and oil drilling rigs. It also owns shipyards in Singapore and Indonesia, and other Asian businesses including a fleet of 158 tankers, cargo ships, tugboats, barges and other vessels.

It is at those Southeast Asian businesses that DryDocks World is considering setting up joint ventures, Buamim said. He said the company does not want to give up control of its Asian businesses altogether, but is open to splitting some operations 50-50.

"It's not selling majority stakes," he said. "They will be partners in the yards, for instance ... to build capacity for themselves and us also."

There have been no talks to set up a joint venture at the company's core Dubai shipyard, which is expected to generate $116 million in profit this year, Buamim said.

He didn't identify potential business partners for the Asian operations.

Buamim discussed the plans at an event to launch a new business district called Dubai Maritime City along the city-state's Persian Gulf waterfront.

DryDocks World's parent Dubai World sent global markets reeling two years ago when it acknowledged it couldn't pay billions of dollars of debt as promised. It signed a final agreement with its creditors to restructure some $25 billion in debt in March.

DryDocks World and a number of other subsidiary companies were excluded from that restructuring process, leaving them to sort out their own heavy debt loads separately.

The shipbuilding company's restructuring is complicated by a lawsuit by one of its creditors, Monarch Alternative Capital, which is seeking about $45.4 million it is owed through British courts.

Credit rating firm Moody's Investors Service estimated this month that Dubai and its web of state-linked companies owe creditors at least $101.5 billion.

[Associated Press; By ADAM SCHRECK]

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