Dubai’s Drydocks World’s debt restructuring hit a minor snag yesterday after the shipbuilder’s lawyers said a dispute over a rig built in Singapore may require an adjustment to a debt deal Drydocks is hoping to have rubber stamped by a special insolvency tribunal at Dubai’s DIFC courts.
Clifford Chance lawyers representing Drydocks revelead that the company had issued a guarantee for a rig being constructed at its yard in Singapore by its local subsidiary. The rig had been rejected by the unnamed client. Legal efforts in Singapore to avoid the implications of the rig guarantee have failed, triggering an issue for Drydocks’s Dubai insolvency proceedings.
The National reports that, under the terms of the contract, Drydocks’s Singapore banks – Oversea-Chinese Banking Corp, United Overseas Bank and DBS Group – had refunded the customer, leaving Drydocks liable to transfer ownership of the rig to the banks concerned.
The transfer requires Drydocks to obtain the consent of two-thirds of Drydocks’s creditors. If unresolved, DBS, UOB and OCBC will be added to Drydocks’s existing creditor pool and then be subject to a cramdown on the five-year repayment deal currently before the court.
“I’m very confident by the time we are next here, this is a problem that will have gone away,” lawyer Mark Hyde, a partner at Clifford Chance, told reporters outside the DIFC Courts, according to Reuters.
“The short delay should not have any material impact on the business or its operations,” Drydocks Chairman Khamis Juma Buamim said in a statement issued after the hearing.
Drydocks World is seeking court approval of a proposal to repay its $2.2 billion distressed debt pile
