Drydocks World in Asian joint venture

Drydocks World has set up a joint venture with Singapore's Kuok Group to run its Asian operations as it works towards completing a massive debt restructuring plan.

Drydocks World's chairman, Khamis Juma Buamim, will chair the new company. Razan Alzayani / The National

Drydocks World has set up a joint venture with Singapore's Kuok Group to run its Asian operations as it works towards completing a huge debt restructuring plan.

The shipbuilding and repair company's Asian business consists of four shipyards in Singapore and Indonesia as well as a fleet of more than 100 tankers, cargo ships, tugboats, barges and other vessels.

The new venture, a partnership with Kuok's Pacific Carrier, will be named DDW-PaxOcean Asia and will be based in Singapore. Drydocks World's chairman, Khamis Juma Buamim, will chair the new company.

"This is joint venture of true value. It is not a takeover. It is not a process where people are running away from their responsibilities or anything like that," Mr Buamim said after the signing.

He added the joint venture would be positive for the company's ongoing US$2.2 billion (Dh8.08bn) debt restructuring and said Drydocks World, based in Dubai, had been working on the deal since at least December, when the possibility of sharing control of its Asian businesses was first discussed.

The new group, to be based in Singapore, will be active in nine countries, own about 300 vessels and operate six shipyards, officials at the two companies said.

However, Drydocks World's huge complex near Dubai's Maritime City - the largest drydocks in the world - will not come under the new joint venture.

No financial details of the deal were disclosed but both companies said the agreement was scheduled to be completed in the third quarter of this year. Pacific Carriers executives declined to say how much of a stake Robert Kuok, a Malaysian tycoon, would have in the venture.

Pacific Carriers is focused on ship management, freight trading and offshore marine services.

Mr Kuok has investments which include the Shangri-La hotel chain as well as the English-language newspaper South China Morning Post, based in Hong Kong, and property holdings around the world.

Drydocks World is owned by the government-controlled conglomerate Dubai World. Most of Drydocks World's creditor banks have already agreed to a deal to draw down its debt, which stems from the financing it needed to raise to purchase the Asian assets in 2007.

The company managed to get more than the required two thirds of lenders to back the scheme. A minority of the creditors, including the hedge fund Monarch Alternative Capital, had resisted the restructuring, said Mr Buamim.

He also confirmed that once the debt deal was complete, the shipyard's focus would be on supplying and servicing the energy sector.

"We had to think seriously what would happen in the next 15 to 25 years, and we plotted it out.

"The data indicated that the only industry that has a growth cycle up to 2030 in some cases is the oil and gas and energy industry," said Mr Buamim.

Dubai World, sent markets reeling in 2009 when it acknowledged it was unable to pay back billions of dollars it owed. It signed an agreement to restructure some $24.9bn in debt last March, however, and Drydocks World was not included in that process.

Drydocks World was advised by DBS Bank, Clifford Chance and McKinsey, while Allen & Gledhill was adviser to Kuok.