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DP World Pays Sukuk, Bond Obligations; 
to Go Ahead with $2.5b London Project

Issac John / 5 January 2010

DUBAI — DP World Ltd, a subsidiary of Dubai World, announced on Monday that it had paid coupon and profit obligations on its sukuk and a bond issue on time, and said it would press ahead with its $2.5 billion London Gateway and Logistics Park project.

The world’s fourth largest marine terminal operator said it had bought the remaining 1,000 acres of land for its London Gateway and Logistics Park project for $220 million after it decided to proceed with the construction.

In a statement, the global port operator said  its board reviewed a number of options for the London Gateway project “in light of the current market downturn and decided to proceed with construction of essential infrastructure that lays the foundation of the facility.”

In a separate statement posted on Nasdaq Dubai Website, the ports operator said it had distributed profit for the 180-day period on its $1.5 billion sukuk issue due in 2017. The profit rate was 6.25 per cent for a payout of $46.9 million.

DP World, which is not part of Dubai World’s debt restructuring plans, also said it had completed a coupon payment of $59.9 million for the period ending December 31st on a $1.75 billion bond issue due in 2037.

In October, DP World reported a 6-per cent fall in third-quarter container volumes and said its 2009 results would be in line with market expectations. The ports operator also has a $3 billion loan maturing in October 2012. London Gateway project is a new deep-water 3.5 million containers-a-year facility. The company said it bought the land and Royal Dutch Shell’s remaining interests in the project.

DP World said it would continue to review the development of the port and park operations in line with market demand.  DP World’s decision to go ahead with the container hub project on the river Thames near came amid market concerns over the future of the project after its parent company, Dubai World, requested a freeze on some $26 billion of debt payments while it restructures the group.

DP World put the $2.5 billion London Gateway project “under review” in March because of the downturn in global container shipping. The project reportedly has faced difficulty raising bank financing for $665 million of up front infrastructure investment, Thurrock Council said earlier in its application for central government permission to raise funds for the project.

“Bank interest in London Gateway is either very limited, or on terms … which will severely impact DP World’s equity returns, making the project even more unattractive,” Thurrock Council said. The European Investment Bank, the European Union’s long term lending arm, recently approved nearly $500 million of loans for London Gateway linked to the entire project rather than the terminal infrastructure.

DP World inherited London Gateway in its $6.5 billion acquisition of the UK’s P&O Ports in 2006. DP World currently operates 49 terminals and 12 new developments across 31 countries.

·         issacjohn@khaleejtimes.com

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