Dubai’s DP World defends finances

DUBAI, United Arab Emirates — DP World officials defended the Dubai port operator’s finances Sunday, saying the company is under no pressure to raise cash even as a sister firm announced plans to seek new terms on its debt.

DUBAI, United Arab Emirates — DP World officials defended the Dubai port operator’s finances Sunday, saying the company is under no pressure to raise cash even as a sister firm announced plans to seek new terms on its debt.

Executives at the cargo handler said last month’s move to slash its stake in Australian ports was solely a strategic decision meant to shift more emphasis to fast-growing emerging markets. They dismissed suggestions that DP World might soon need to retool its own debt terms.

“We’re not compelled into a position or being pushed into a corner due to any circumstance,” Anil Wats, executive vice-president and chief operating officer, told shipping industry reporters during a visit to DP World’s sprawling home port in Dubai. “If at all we decide to do anything, it would be in line with the strategy or the philosophy of the organization.”

DP World sold the bulk of its Australian businesses to a Citi investment fund in late December for $1.5 billion. It continues to manage the ports in Brisbane, Sydney, Melbourne, Adelaide and Fremantle.

The port firm plans to use the proceeds to pay down debt, which stood at just over $8 billion as of last June. Included in its liabilities is a $3 billion revolving credit line that must be paid off or refinanced by October 2012.

DP World is generally seen as one of Dubai’s healthiest and best-run state-linked companies, with operations at 49 sea cargo terminals on six continents. But concerns about its finances continue to swirl in large part because of the weighty fiscal problems faced by its parent, government conglomerate Dubai World.

Dubai World persuaded lenders to agree to new terms on nearly $25 billion in debt last year. DP World and a handful of other Dubai World subsidiary companies were exempt from that process.

Another Dubai World division, property developer Nakheel, is still in talks to convince a handful of holdout creditors to sign on to a separate plan to restructure at least $10.5 billion in debt. Nakheel is also busy fending off legal claims, including accusations that undeveloped manmade islands it created to resemble a map of the world are being eroded and silting up navigation channels. Nakheel has denied the allegation.

On Saturday, Dubai World’s shipbuilding and repair arm Drydocks World — which like DP World was excluded from its parent’s restructuring — said it too plans to seek new debt repayment terms. The company has an outstanding $2.2 billion loan it took out in 2008.

It announced it has secured $200 million in immediate financing to cover ongoing business costs from seven of its existing lenders. That financing is good through the end of April.

The company says it hopes complete the broader debt restructuring in the coming months.

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