DP World buying Dubai Maritime City, Drydocks World for $405 M
DUBAI (Reuters) – DP World, one of the world's largest port operators, has agreed to buy two fellow state-owned maritime companies from its parent for $405 million.
DP World will acquire Dubai Maritime City owner Maritime World for $180 million and Drydocks World for a capital injection of $225 million from Dubai World, the port operator said in a statement on Monday.
Dubai World, the state-owned conglomerate which agreed to a $25-billion debt restructuring in 2011 after it was hit by the global financial crisis, is the majority owner of DP World, Maritime World and Drydocks World, according to its website.
The transactions are expected to close before the end of the first quarter of 2018, DP World said.
The agreement comes amid a regional dispute that has seen the United Arab Emirates (UAE), and other Arab countries, cut ties with Qatar, including closing access to its ports.
That has meant that DP World's flagship port Jebel Ali, the region's largest, is no longer handling cargo destined to and from Qatar which is instead being shipped direct to Doha or through other regional ports.
DP World said Dubai Maritime City, a commercial and industrial park located next to its Port Rashid, would offer an alternative to the Jebel Ali Free Zone which it also owns.
The port operator also said that Drydocks World, the Middle East's largest ship repair yard, would be integrated with its maritime services unit P&0 Maritime.
"Overall, these transactions will enhance our position as a leading maritime services provider, and we look forward to leveraging on our proven track record to accelerate growth and deliver stakeholder value,” DP World Chairman Sultan Ahmed bin Sulayem said.
The acquisitions are subject to certain conditions, which were not disclosed, and the acquisition of Drydocks World will be subject to a debt restructuring, DP World said.
Drydocks World has 85 percent creditor support for a deal to amend the terms of its $2.3-billion restructuring deal originally signed in 2012, a banking source told Reuters.
If the company does not achieve 100 percent support by the end of the month, it plans to push the restructuring deal through via Dubai's Decree 57 legislation, the source said.
Decree 57 was brought in by the Dubai government in the wake of Dubai World's debt crisis to administer the conglomerate’s previous restructuring in the absence of effective insolvency law in the UAE.
In a statement to Reuters, DP World said the acquisition will help Drydocks in its negotiations with creditors to significantly reduce its outstanding debt.
DP World has bought assets from its parent before. In 2014, it agreed to buy industrial and logistics infrastructure firm Economic Zones World (EZW) for $2.6 billion from Dubai World.
The acquisition included Jebel Ali Free Zones, the emirate's largest free trade zone, which is located alongside DP World's Jebel Ali Port.