Creditor support grows for Dubai’s GGICO $572m debt deal

Dubai-based Gulf General Investment Company (GGICO) has agreement from nearly half of its creditors on a Dhs2.1bn ($572m) debt restructuring, sources close to the matter told Reuters.

The deal is set to achieve the target of 75 per cent creditor support by the end of the month, the sources said, adding that the terms push back the bulk of the company’s debt repayment to 2024.

Some of the debt will be repaid immediately, partly from proceeds of a sale of non-core assets from real estate, retail, manufacturing and financial services holdings, one of the sources said.

The company’s future growth strategy will be focused on its core business of mid-market property and hotel development, the source added.

It is the second time in recent years that the company has been forced to renegotiate financial commitments, having completed a Dhs2.8bn restructuring in 2012.

Like a number of companies in the region, GGICO’s finances have become stretched because of muted economic activity as a result of lower oil prices.

One of the sources said that the number of lenders signalling their support for the deal is growing daily. Commercial Bank of Dubai is the only bank so far to indicate that it would not support the agreement.

Neither GGICO nor Commercial Bank of Dubai responded to a request for comment.

Emirates NBD and Abu Dhabi Islamic Bank, which are among the largest creditors on the deal, have both signed the agreement. Other banks on the creditor steering committee include Dubai Islamic Bank, Abu Dhabi Commercial Bank and Al Hilal Bank, which collectively represent about 50 percent of the debt.

Separately, GGICO is in talks with an unidentified financial institution to restructure 257.04 million dirhams of debt that had been due to be repaid on September 30 last year, the company said last month.