DP World Ltd., the world’s third-biggest port operator, is setting up a credit facility of about $1 billion with a group of 10 to 12 banks, three people familiar with the matter said, as it seeks funds for capital spending.
The five-year revolving facility offers a margin of 225 basis points, or 2.25 percentage points, above the London interbank offered rate, said two of the people, declining to be identified because the information is private. Each bank may contribute about $75 million, with the Dubai-based company and the lenders expected to sign an agreement in two weeks, one of them said. A spokeswoman for DP World, who didn’t wish to be identified because of company policy, declined to comment.
HSBC Holdings Plc, Standard Chartered Plc and Citigroup Inc. are contributing to the facility, two bankers familiar with the matter said in February. DP World has a $3 billion facility maturing in October which it raised in 2007 at a margin of 45 basis points above Libor, data compiled by Bloomberg show. The new facility will help meet capital expenditure and operating expenses, according to one of the people.
DP World, which operates more than 60 terminals across six continents, is expanding operations in China, India and the Middle East as it seeks to boost capacity to 100 million twenty-foot equivalent container units by 2020, according to its website. The company said in December it will invest $850 million in the next three years to increase capacity at its flagship Jebel Ali port on the outskirts of Dubai.
DP World had outstanding debt of $7.9 billion, including that of its subsidiaries, and $4.1 billion in cash at the end of June, its results show. It is rated Baa3 by Moody’s and BBB- by Fitch, their lowest investment grade scores.
Fitch Ratings said in a report March 8 that “it understands” that DP World is setting up new syndicated credit facility of between $1 billion and $1.5 billion, although the company has no plans to draw on the facility this year.
DP World handled 54.7 million TEUs at its ports last year compared with 49.6 million TEUs a year earlier, it said Jan. 31. The company forecast full-year gross profit to be “in line with expectations” after reporting a better-than-expected 36 percent rise in first-half profit to $281 million.
DP World shares are listed in Nasdaq Dubai and the London Stock Exchange.