Tuesday, Dec 08, 2009

(Adds further details)

CAIRO (Zawya Dow Jones)--Dubai World, the state-owned holding company seeking to reschedule $26 billion in debt, moved Tuesday to ring-fence its ship building unit Drydocks World, saying it wouldn't be part of the wider restructuring process of the firm.

"Following further review, Drydocks World and its subsidiaries will not be included in the proposed restructuring process for Dubai World and its real estate-related subsidiaries," Dubai World said in a statement.

"Drydocks World has been in constructive dialogue with its lenders for several months and its financial profile does not require it to be included in the more wide-ranging restructuring process," it said.

Dubai World, which is struggling to deal with its debt and almost $60 billion in liabilities, and the emirate's government are in talks with banks and creditors about restructuring the conglomerate's debt. Investors are concerned that Dubai World's real-estate unit, Nakheel, will default on a $3.52 billion Islamic bond due Dec. 14.

Dubai's government rattled international markets in late November after saying it would seek at least a six-month freeze on debt payments of Dubai World, one of the government's flagship conglomerates with diverse assets from ports to real estate.

"Drydocks World continues to have sufficient financial capacity to service its debt and remains well positioned to take advantage of the expected improvements in the ship building and offshore industries in the coming years," Dubai World said.

In 2007, Drydocks World, which operates a fleet of 170 vessels, paid about $424 million for Singapore shipbuilder Pan-United Marine and $1.6 billion to buy offshore oil-rig builder Labroy Marine as it sought to expand outside the Middle East.

Abdelrahman Al Saleh, director general of Dubai's Department of Finance, told Al Arabiya television earlier Tuesday that Dubai World may need more than six months to complete the restructuring of its debt.

Ratings agency Moody's Investors Service downgraded the credit worthiness of a raft of Dubai government-controlled companies following Saleh's comments, citing a lack of government support over the emirate's debt obligations.

Moody's downgraded its issuer ratings for DP World (DPW.DIF), Dubai Electricity & Water Authority, Jebel Ali Free Zone, Dubai Holding Commercial Operations Group, Emaar Properties PJSC (EMAAR.DFM) and DIFC Investments. All remain on review for further downgrade, the agency said in an emailed statement.

Shares traded on the Dubai Financial Market's benchmark index plummeted 6.1% Tuesday, wiping out the year's gains. Dubai stocks have fallen 22% since Dubai World said it was seeking the debt standstill.

-By Summer Said, Dow Jones Newswires; +9715 0295 1855; summer.said@dowjones.com

(END) Dow Jones Newswires

08-12-09 2105GMT