US hedge fund wins $72 million claim against Dubai’s Drydocks

A US-based hedge fund said it has won a $72 million legal claim against Dubai’s Drydocks World for defaulting on a loan, putting the ship builder’s $2.2 billion debt restructuring in further trouble. Monarch Alternative Capital said in an emailed statement that Drydocks, a unit of Dubai World, has been ordered to pay the entirety of the sum of £45.5 million ($71.6 million) claimed plus Monarch’s legal costs. Monarch sued Drydocks last year in the High Court of London casting a blow to the restructuring talks. A week ago, Drydocks proposed repaying creditors in five years and said it was seeking more working capital as it tried to restructure a $2.2 bln loan facility, ending lengthy and complex debt talks. The restructuring had been scheduled to be completed by April 2011, but it was slowed by a lack of government support and opposition from hedge fund creditors, including Monarch. When asked how the judgment would affect its restructuring Khamis Juma Buamim, Drydocks World chairman, said: “As made clear at all lender meetings, the company is confident that it can still implement its restructuring if it transpires that Monarch do not accept the terms on offer.” “But I would very much hope that notwithstanding their legal action Monarch will accept the very reasonable restructuring proposal.” Debt talks Drydocks World’s debts stem from a multibillion-dollar loan it took out to fund expansion in Singapore. Drydocks has its major ship and rig building facilities in Southeast Asian countries such as Singapore and Indonesia. The $2.2 billion facility, taken out in October 2008, comprised a $1.7 billion three-year loan paying 170 basis points and a five-year $500 million loan with a 190 basis point margin, according to Thomson Reuters data. Bookrunners on the 15-lender syndicate were BNP Paribas , HSBC, Mashreq, Standard Chartered and Lloyds Banking Group among others. Presence of hedge funds is seen complicating debt restructurings in the Gulf Arab region, where previous negotiations have been bank-only affairs. Another US hedge fund manager Davidson Kempner Capital Management is part of the creditor committee for the $1.1 billion debt restructuring at Bahrain investment house Arcapita , the first time a fund has fulfilled such a role in the region.