Dubai International Capital appoints banks for loan

23 October 2009

Dubai Holding subsidiary is seeking to raise $550m debt

Dubai International Capital (DIC), the investment arm of state-owned Dubai Holding, has appointed four banks to arrange a $550m syndicated loan for the firm.

DIC has appointed the UAE’s Mashreqbank and Noor Islamic Bank, along with the UK’s Standard Chartered Bank and Royal Bank of Scotland, to arrange the facility, which will be used to replace a $600m loan arranged by France’s Calyon in 2007 that matured in August.

Bankers close to the deal say DIC may pay up to 500 basis points over the London interbank offered rate (Libor) for the loan, the high price reflecting the continued reluctance of banks to make fresh loans to Dubai.

In August, DIC arranged a bridging loan to provide temporary funding, giving it more time to prepare a new syndicated loan.

The Dubai Holding subsidiary originally took out the $600m loan to part-fund its $1.3bn acquisition of UK-based Travelodge Hotels in 2006. The debt was split between a $400m loan and a $200m credit facility, which was not fully used. Because it only used some of the $200m, DIC only needed $550m to refinance the original $600m loan.

The Dubai Civil Aviation Authority is also in talks with banks about refinancing a $1bn sukuk (Islamic bond),
which matures in November (MEED 16:10:09).

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