The shipbuilding division of troubled state conglomerate Dubai World said Tuesday it is determined to hammer out a $2.2 billion debt restructuring deal, despite a legal challenge from one of its creditors.
The unit, known as DryDocks World, gave no indication when it expected the restructuring to be completed. It has been in talks with lenders for months to retool the terms of the loans, which were excluded from its parent company's own high-profile debt talks.
"The company is working diligently ... to finalize a consensual financial restructuring in the shortest possible time. The company from inception affirmed (its) commitment to reach an amicable and viable restructuring that will maximize all returns," the company said in an emailed response to questions.
The Financial Times reported that DryDocks World creditor Monarch Alternative Capital is suing the company in Britain, seeking the repayment of about $45.4 million it is owed.
The New York-based hedge fund didn't immediately comment on the suit.
DryDocks World told The Associated Press it is considering its response to the legal challenge, which it says is "regrettable."
In the meantime, the company said it is examining its marketing and business development efforts "to suit current market scenarios in various segments." It didn't elaborate.
DryDocks World operates what it says is the Middle East's largest shipyard in Dubai, where it builds and repairs a variety of cargo ships, tankers and oil drilling rigs. It also owns shipyards in Singapore and Indonesia.
Its parent company, Dubai World, sent world markets reeling nearly two years ago when it acknowledged it couldn't pay back billions of dollars in debts amassed during Dubai's meteoric building boom. It signed a final agreement with its creditors to restructure some $25 billion in debt in March.
Dubai World excluded DryDocks World's debt from its own restructuring effort in December 2009. At the time, it said Drydocks World was in constructive talks with its lenders and had the ability to service its debts.
Dubai and its vast web of state-linked companies owe $113 billion in publicly held debt, according to the International Monetary Fund.
Zafar Nazim, an analyst at JP Morgan, said in a research report last week that Drydocks World and other government-linked companies such as Dubai Group may not get much direct financial support from the government for their restructuring efforts, because much of their business is overseas.
"That said, these restructurings have been dragging on for some time, and there is a complete vacuum of information on the progress or timeline of their resolution," Nazim wrote.