Dubai’s Drydocks World, part of the debt-laden Dubai World group, has announced a deal to sell a stake in its South East Asian operations as part of its plans to restructure $2.2bn of debt.

The firm is creating a new joint venture with Singapore’s Kuok Group that will pool the shipbuilding and ship repair assets of both companies. Kuok Group subsidiary Pacific Carriers is expected to take a stake of about 60-70 per cent in the newly formed company.

As a result, it is expected to pay a substantial sum to Drydocks, which will be used to repay some of its debts under a restructuring agreement that is currently in the process of being forced through courts in Dubai and Singapore as a result of one creditor’s refusal to sign up to the plan.

Drydocks bought the Southeast Asian assets in 2007 and borrowed the $2.2bn to fund the purchase, a deal that chairman Khamis Juma Buamim now admits was a mistake. He says the joint venture deal “is positive for the debt restructuring”, but would not comment on how much Drydocks will earn from the deal, or how much debt it expects to pay off.

Before Drydocks started court proceedings on the restructuring deal, it got most of its creditors to sign lock-up agreements that envisaged the sale of a stake in the Southeast Asian business. These give the company until 30 September to complete the deal, a timeline which Buamim says he is confident will be met.

“We want to have no more connectivity to banks,” says Buamim once the restructuring deal is completed. He adds that he has instructed all subsidiaries of Drydocks to reduce their debt levels by 60 per cent within the next five years in order to get the company on a better financial footing.