Dubai World unit eyes sale of UK asset
Move aimed at meeting debt repayment
Dubai (Reuters) Economic Zones World (EZW), a unit of Dubai World, is considering the sale of its UKbased warehouse property developer Gazeley, as it l ooks to repay some of its debt of over $2 billion (Dh7.36 billion) this year, three banking sources said.
Gazeley is one of the four businesses held by EZW, which operates technology, logistics and industrial parks as well as Jebel Ali Free Zone ( Jafza) under the Dubai World Group umbrella.
A potential sale of Gazeley will help EZW repay a portion of debt maturing at Jafza, the sources said, speaking on condition of anonymity.
Jafza is aiming to ref inance a $2.04-billion Islamic bond maturing next November. The firm has hired i nvestment bank Rothschild for that process, two of the sources said.
Dubai World bought Gazeley from Wal-mart Stores in 2008 for an estimated £300 million to £400 million (Dh1.68 billion to Dh2.24 billion) but a likely sale could only happen at a discount due to the current economic climate and lack of buyers, two sources said.
“They (EZW) have earmarked it for sale. Banks are chasing that mandate but don’t think they have off icially named anyone,” one of the sources said.
“Gazeley is a mediocre asset. They will be lucky to generate the purchase price on it given the current market conditions,” he added.
Gazeley has so far developed around 6.4 million square metres of warehousing, according to the company’s website.
EZW declined to comment on the matter.
Confident
It s chairman Hesham Abdullah Al Shirawi said l ast month that he does not rule out asset sales to help raise funds to pay off Jafza’s debt but said the company does not need to seek government support.
Ratings agency Moody’s said last month that Dubai, which has restructured some $41 billion in debt related to Dubai World, faces refinancing risks related to three state-linked entities, including Jafza.
Rival ratings f irm Standard & Poor’s has named the Jafza bond maturity as among Dubai state-linked obligations i n 2012 with the greatest chance of encountering repayment issues.