Ship Right - Financial Restructuring of Drydocks World LLC
A&O advises on US$2.2 billion restructuring of one of the largest shipyards in the Middle East.
Drydocks World LLC (2012)
Acting for the co-ordinating bank group on the financial restructuring of Drydocks World
A&O advised the co-ordinating bank group on the US$2.2 billion restructuring of the financial indebtedness of one of the largest shipyards in the Middle East. The transaction was implemented via inter-conditional Singapore schemes of arrangement and company voluntary arrangements under Dubai’s Decree 57 of 2009.
The financial restructuring of Drydocks World involved the first use of the company voluntary arrangement process under Dubai’s Decree 57 to implement a restructuring and, as such, represents a major milestone in the Middle East region.
The transaction involved the disposal of a majority of Drydocks’ Southeast Asian business and the splitting of a US$2.2 billion term loan into senior and junior debt instruments. The junior ‘profit participating loan’ also contemplated a deferred debt/equity swap, which necessitated a corporate reorganisation of the group and the use of a DIFC trust.
This was the third of the Dubai World group restructurings in the early part of the Global Financial Crisis (after Dubai World and Nakheel). A&O acted for the creditor committees on each of these transactions.
“A first for the Middle East region”
Mike Duncan (Partner, London) commented: “We are pleased to have assisted in bringing this transaction to a successful closing. There were many complex and heavily negotiated elements to the transaction, but the novel implementation mechanics, using Decree 57 for the first time, really stand out. The use of a compromise procedure of this type to facilitate a restructuring is a first for the Middle East region.”
The A&O Team
The restructuring involved teams across the London, Dubai and Singapore offices.
The London restructuring team was led by partners Carolyn Conner and Katrina Buckley, assisted by associates Nick Charlwood, Nick Lister and Hannah Valintine.
The London Banking team was led by partner Michael Duncan, assisted by counsel Simon Chan.
The Dubai Banking team was led by partner Bimal Desai, assisted by associate Afsha Karim.