Jun 22 2012
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Drydocks World ready to switch to growth mode
After debt negotiation, company looks to focus on offshore oil and gas projects
Dubai: For someone who has been negotiating with a battery of legal and financial experts on a complex debt restructuring deal for some time, Khamis Juma Bu Amim, Chairman of Drydocks World and Maritime World, appears to be a relaxed man.
As he prepares for this interview at his once-tense office, he exudes confidence that the $2.2 billion (Dh8 billion) debt restructuring deal will shortly receive legal acceptances.
“We have agreed and signed off on all the points with our lenders on the $2.2 billion debt deal. We believe it’s a fair and equitable deal as per the process we hope to conclude by July. It is all a matter of legal documentation,” Bu Amim says assuredly. “The ball is in their court now.”
The Dubai Government-owned company has an order book of $375 million (Dh1.37 billion) at hand. “In addition, we have a monthly turnover in ship repair business to the tune of up to $35 million which is quite strong,” he says.
Drydocks World has 7,800 people on its payroll. Despite the debt overhang, the company is planning to hire more. “By the end of this year, we will require over 2,000 more workers to manage the growth in business,” he says.
Completing the jigsaw
The crucial deal is the last piece in the complex jigsaw for Drydocks World — operator of major global maritime clusters in Dubai, Singapore and Indonesia that specialises in ship repair and maintenance, shipbuilding and conversion, shipping and chandlery, maritime clusters and yacht repairs — that will help the company to return to a growth mode with its new strategy.
Drydocks World and Maritime World are part of Dubai World — one of the biggest public sector holding companies in the UAE — that was affected by the global economic crisis.
At the time of the Lehman Brothers’ collapse in September 2008, almost all Dubai World entities were undergoing major long-term expansion programmes, backed by short-term bank loans. The recession suddenly reduced demand, as a result halting most of these projects while some of the debt repayment deadlines were approaching. At the end of 2008, Dubai World was sitting on a debt pile of $59 billion.
So, in November 2009, Dubai World had requested its creditors for a halt in debt repayments of $26 billion that were to mature from 2010 onwards.
Almost all Dubai World entities such as Nakheel, Istithmar, DP World and Drydocks , had to undergo management overhaul to clean themselves up from the mess. In this process, heads began to roll, salaries of those who survived were squeezed and projects were halted.
“There was a problem and there were solutions. The key was to find the right one and that’s what we have done,” Bu Amim says. “If the problem is big, the solution is small. Also how you find the solution and how you execute it is crucial.”
Appointed as Chairman of Drydocks World and Maritime World in late May 2010, Bu Amim, a former senior executive of ConocoPhillips, has successfully led the twin organisations through stringent and successful organisational and financial restructuring that helped the company tide over global recession and emerge as a profitable international player within two years.
For Bu Amim, the worst is over. “However, the best is yet to come,” he quips. “That’s why we want to conclude this deal that will give us five years to repay the debts and get on with our business.
“We are a profitable organisation and we are more stable now than before. We have streamlined operations and strengthened operational efficiencies to maximise profits that will help us repay the debts and reinvest in facilities that need refurbishment and modernisation.” Dubai has a strong bond with the region’s maritime industry. Due to this, the Dubai government had as early as 1971, planned to set up a large ship repairing services close to Port Rashid. The late Shaikh Rashid Bin Saeed Al Maktoum, Dubai’s then Ruler and the first Vice President and Prime Minister of the UAE, ordered the project and Dubai Drydocks was commissioned in 1983 — almost the same time when Jebel Ali port and free zones were developed.
In the course of the following three decades, Jebel Ali Free Zone, Dubai Customs and DP World were amalgamated under the Ports Customs and Free Zones Corporation that later was brought under Dubai World , along with Nakheel, Istithmar, Limitless, Dubai Multi Commodities Centre and a number of organisations.
Later, the government established Dubai Maritime City to expand its ship-repair industry at a reclaimed land between Port Rashid and Dubai Drydocks . Dubai Drydocks later added a ship-building facility and acquired four facilities in Singapore and Indonesia — bankrolled by a consortium of lenders. As their business expanded, both entities have been renamed to Drydocks World and Maritime World and were brought under Dubai World .
Once the $2.2 billion debt restructuring deal is cleared, Bu Amim says, some of the facilities will undergo refurbishment, modernisation and overhaul. “Besides, we are also renewing our focus on offshore oil and gas sector where we could leverage our strength and generate new business opportunities,” he said.
“For the next 20 years at least, if not more, the global economy will continue to be powered by oil and gas — an industry that will require new investments. We would like to tap that business.”
With the debt restructuring deal in sight, Bu Amim now looks at mid- to long-term future of the company. “The deal will clear the way for a sustained long-term growth of the company. Then, I will be looking at forming joint ventures with some of the existing ship repair services in different parts of the world, especially the Far East where the fastest growing economies exist,” he said. “I do not have a contract at hand — but we are closing in on various alternatives and I might be able to give you some good news before the end of the year.”
By Saifur Rahman, Business Editor
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