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Cash in before you’re forced out
Dubai’s companies have come a long way since they were surrounded by doomsday predictions and debt last year. But as they start to offload assets, are they jumping or are they being pushed?
December 12, 2010 8:51 by Eva Fernandes
The glory days, when investment companies in Dubai used to get into the press for shelling out millions on their latest prestigious purchases, came to an abrupt end last year when news of the Dubai World multi-billion dollar debt broke.
A year on, during which time that company’s billions of dollars of loans have been successfully restructured, it would appear Dubai’s investment businesses have entered a new, perhaps more sobering, phase. The latest strategy, out of both necessity and practicality, is offloading assets, to judge by two particular developments this weekend. Perhaps it isn’t too surprising, given the recent talk of privatising Dubai government assets.
The first story was the news that Dubai International Capital (DIC), owned by Dubai Holdings, is going to lose almost all of its 60 percent stake in the UK’s diagnostic imaging company Alliance Medical after a takeover by banks. The takeover comes after DIC refused to pump in extra cash to keep up to date with payments on the £570 million debt connected to the company. Alliance, which is the UK’s largest provider of MRI and CT scan equipment to hospitals, has a new structure that includes Lloyds, M&G and German’s Commerzbank (the company’s main creditors). DIC remains a minority shareholder, but barely, keeping just 2.5 percent of the company. And it is not completely off the hook; the restructure has meant that the banks have cut its Alliance debt, but DIC still owes £250 million post-take over.
We’re sure it is not the way that DIC would have chosen to dispose of assets. But one company is happy, to judge from reports. Philippe Houssiau, Alliance’s chief executive is quoted in The National as saying “This agreement brings to an end a period of uncertainty for the company and provides Alliance Medical with a secure and stable financial position that supports the long term future of the company.”
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