Dubai Group LLC, the investment company that has been seeking payment relief on loans for the past three years, repaid a $300 million syndicated facility led by Citigroup Inc. (C), two people with knowledge of the matter said.
Some of the lenders will exit talks on Dubai Group’s $6 billion debt pile, said the people, who asked not to be identified because the information is private. The Islamic loan was secured by a 30.47 percent stake in Bank Islam Malaysia Bhd, which was sold to Kuala Lumpur-listed BIMB Holding Bhd (BIMB) on Dec. 19 for $550 million, according to a statement on the Malaysian stock market.
The repayment follows Dubai Group’s sale of consumer finance company Dubai First to Abu Dhabi-based First Gulf Bank PJSC six months ago. Dubai’s state-linked companies are taking advantage of an economic rebound and selling assets as they tackle more than $40 billion of debt maturing in the next two years. Final documentation for a deal between Dubai Group and its remaining creditors is being prepared and could be signed as early as next week, one of the people said.
A spokeswoman for Dubai Group, who asked not to be identified citing company policy, declined to comment, as did a spokesman for Citigroup.
Dubai Financial Group LLC, a unit of Dubai Group, acquired a 40 percent stake in Bank Islam for $224 million in October 2006. Its holding was reduced to 30.5 percent in 2009 because Dubai Financial Group opted out of a capital increase.
Dubai, the second-largest of seven sheikhdoms that make up the United Arab Emirates, roiled global markets in 2009 after its near default on $25 billion of debt. State-owned companies such as Dubai Holding LLC, Dubai Group’s parent, and Dubai World Corp. borrowed billions in a spending binge intended to transform the city into the Middle East’s trade and tourism hub.
The emirate’s state-linked debt coming due amounts to about $32 billion this year and $9.6 billion in 2015, according to Bank of America Merrill Lynch estimates.
Dubai Holding, one of three main government-owned holding companies, said in June it plans to sell its 35 percent stake in Tunisie Telecom. Dubai World also sold Atlantis, The Palm Ltd., a hotel on Dubai’s palm-shaped man-made island, to Investment Corp of Dubai last month.
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