Drydocks World – Dubai, a shipbuilding and repair conglomerate, confirmed on Thursday that “an overwhelming majority of its lenders” backed its $2 billion debt restructuring bid.
The confirmation about the huge support from lenders came in the wake of the company filing a claim with a special Dubai tribunal for insolvency protection from creditors by invoking ‘Decree No 57’ issued by Dubai Ruler in 2009.
In a statement, Drydocks World said the process would have “no effect upon the on-going operations of Drydocks World, its clients, suppliers or employees. It will be business as usual during the process and going forward once the restructuring is effective.”
Khamis Juma Buamim, chairman of Drydocks World and Maritime World, said Drydocks Dubai’s use of Decree 57 to help it conclude its restructuring “is ground-breaking and was not a step the business took lightly.”
“It is a pragmatic and sensible solution with the crucial ability of allowing a financial restructuring to take place without adversely impacting the business, its operations or its people,” he said.
Buamim said “the business believes strongly in commercial fundamentals of seeking to do what’s right for its customers, suppliers and employees and all its stakeholders. Consequently, the business took the view that the will of the vast majority of its syndicated lenders to support its proposals, should override the disappointing response from an insignificant minority of its syndicated lenders who to date have failed to support the company’s proposals. This lack of support is not in the interests of the business, its operations, its future or its people. It is a decision they have taken for their own reasons. Their lack of support makes no difference to Drydocks Dubai’s ability to conclude its restructuring.”
He said the overwhelming support Drydocks World - Dubai has for its proposals should enable it to rapidly implement its debt restructuring. Once implemented, the business should be well placed to progress its strategic ambitions, secure in the knowledge that it is on a firm financial footing.
Early this week, Buamim said the decision to file the notifications with the Dubai World Tribunal was taken “to protect the interests of the vast majority of the group’s syndicated lenders, the clients, suppliers and wider stakeholders who continue to support the business throughout its restructuring, and who will continue to support it for years to come”.
The tribunal was set up in the wake of Dubai’s 2009 debt crisis as part of new legal procedures meant to govern the restructuring of Dubai World debts. A panel of three judges from Britain and Singapore presides over the Dubai World Tribunal.
The Government of Dubai developed Decree No. 57 to allow groups such as Drydocks World – Dubai, a Dubai World Group subsidiary, to implement a restructuring where its proposals had the support of a significant majority of its lenders, but where it does not have the requisite 100 per cent buy-in needed to implement its plans successfully.