Pacific Controls in bank talks for about 1.4 bln dirham ‘debt’

DUBAI, July 27, (RTRS): Pacific Controls, a Dubai-based technology company, is in talks with banks about restructuring debts of 1.4 billion dirhams ($381 million), sources told Reuters, one of the largest firms to have to do so since the emirate’s economy began to slow.

It is also set to be the highest-profile example to date of a company receiving assistance from a special mechanism set up by the United Arab Emirates’ banking federation to help firms struggling to repay debt, the sources said.

Launched in 2000, the privately owned company benefited from the boom in the UAE’s economy as it provided technology services to local businesses, more recently expanding into cloud computing and the internet of things.

Gulf economies have cooled since lower oil prices began to squeeze revenues in 2014, with governments cutting spending and delaying projects.

Pacific Controls’ clients include a number of state institutions, such as Dubai Civil Defence and the Roads and Transport Authority, government controlled companies including telecoms firm Etisalat, as well as banks, hospitals and schools, its website showed.

It also has clients outside the UAE, such as Saudi Arabian telco Etihad Etisalat (Mobily) and King Abdullah University of Science & Technology (KAUST).

It has encountered difficulties in part because of delayed payments from some of its clients, the sources said, declining to specify which owed money or how much the firm is owed.

Pacific Controls has not made payments on short-term bilateral loans for working capital, sources said. But payments related to a 1 billion dirham longer-term facility had mostly been met, although the principal on a June repayment was only 80 percent covered, one of the sources added.

Many businesses have found it hard to repay hefty debts after the slowdown hit their balance sheets, although so far this has mostly been among small and medium sized enterprises and companies with debt issues lingering from the emirate’s 2009-10 financial crisis.

“Pacific Control Systems group has been in the midst of an organisational restructuring exercise. The comprehensive exercise will help streamline the operations of the company,” the company said in a statement on Wednesday.