News of possible negotiations emerges as subsidiary DP World prepares for listing on London Stock Exchange
Dubai World, the emirate's heavily indebted investment vehicle, is considering refinancing a further $850m (£510m) of debt just seven months after agreeing a $26bn restructuring.
The move by the group's subsidiary, Port & Free Zone World (P&FZ), is revealed in a prospectus produced by ports operator, DP World, which is due to list its shares on the London Stock Exchange next week.
"[DP World] understands that Port & Free Zone World FZE is considering refinancing its outstanding net debt facilities of approximately $850m, secured in part against certain of its shares in the company, in the short to medium term," it states. "Options to refinance the facilities include, inter alia, further bank loans, asset disposals, public market bond issues (including equity-linked bonds) or the sale of shares in the company."
DP World first attracted the attentions of UK investors in 2006 when it seized control of P&O, in a £3.3bn takeover. The deal caused controversy in the US, where P&O ran six ports, with some US politicians arguing that allowing Arab ownership of US ports made the country more vulnerable to terrorism. DP World eventually sold the US port contracts for an undisclosed sum to AIG Global Investment Group.
State-owned conglomerate Dubai World is the parent company of P&FZ, which owns 80.5% of DP World, one of the group's more profitable investments. P&FZ has two representatives on the port operator's board: chairman Sultan Ahmed Bin Sulayem and vice-chairman Jamal Majid Bin Thaniah.
Dubai has been restructuring state-linked firms to deal with an estimated $115bn debt pile, which was built up during the boom years when the emirate became infamous for extravagant construction projects. The fall-out from the hubris forced Dubai World into renegotiating $26bn of borrowings with creditors last year, although P&FZ was excluded from that deal. At the time, it is understood that bankers did not believe the P&FZ debts needed restructuring.
The news of further potential negotiations has emerged as DP World prepares for the long-awaited listing of its shares on the London Stock Exchange, which will begin trading on 1 June.
The company said it believes the dual listing between the London Stock Exchange and Nasdaq Dubai, where the shares are currently traded, will help "attract a broader range of investors". It added that gross container volumes grew by 12% across its 49 operational terminals in the first three months of this year.
However, the performance of the company's share price has not always shown such strong growth. Since floating in Dubai in November 2007, DP World shares have halved to $13.30, giving it a market capitalisation of around $11bn. The company originally announced plans to list on London last year, but claimed technology issues at Dubai Nasdaq delayed its plans. The London listing will not raise additional funds.
Dubai World could not be contacted for comment.