Exclusive: Dubai signs up banks for $9 billion DP World debt deal - sources

[March 19, 2020]   By Davide Barbuscia

DUBAI (Reuters) - Dubai has received commitments from a group of 10 banks for $9 billion in loans to take full control of port operator DP World <DPW.DI> and refinance debt of state investment vehicle Dubai World, two sources told Reuters.

The debt transaction is one of the few deals keeping investment bankers busy in the Gulf as the global coronavirus outbreak slams the brakes on capital markets activity.

Dubai last month said that state company Port and Free Zone World (PFZW), part of Dubai World, planned to buy publicly listed shares of DP World in a deal with a $13.9 billion valuation.

Citi <C.N> and Deutsche Bank <DBKGn.DE> underwrote $9 billion in loans for the transaction and immediately started talks with other banks to distribute the debt, sources told Reuters at the time.

This week a group of 10 banks, including Citi and Deutsche, signed commitments that covered and oversubscribed the $9 billion debt deal, said two sources close to the deal.

The other eight banks are Bank of Nova Scotia <BNS.TO>, Credit Agricole <CAGR.PA>, Emirates NBD <ENBD.DU>, First Abu Dhabi Bank <FAB.AD>, HSBC <HSBA.L>, JPMorgan <JPM.N>, Samba Financial Group <1090.SE> and Standard Chartered <STAN.L>, one of the sources said.

The transaction involves a $3 billion five-year loan, with the rest of the financing comprising shorter-term debt, the source said.

DP World, Citi, Deutsche Bank, Emirates NBD, JPMorgan, and Standard Chartered declined to comment while the other banks and the Dubai department of finance did not immediately respond to requests for comment.

The planned delisting of DP World will add to its leveraging, which last month pushed ratings agencies Moody's and Fitch to place the company under review for a potential downgrade.

As part of the deal, DP World will borrow $5.15 billion to fund a dividend to Dubai World, which is the sole shareholder of PFZW, helping it meet outstanding obligations to lenders.

Dubai World, a conglomerate with interests in ports, real estate and hospitality, signed a $25 billion debt restructuring agreement in 2011 after Dubai was hit by the global financial crisis.

The jumbo $9 billion loan deal was marketed to banks amid increasing concerns over the economic impact of coronavirus on Dubai, a Middle East trade, transportation and tourism hub.

Two banks that were asked to commit to the transaction did not participate, one of the sources said without naming the banks.

The loans will be sold over the coming weeks to a wider group of banks, both sources said.

(Reporting by Davide Barbuscia; Editing by David Goodman)

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