City Developments Ltd (CDL) is studying news of a restructuring of Dubai World, which is a partner in a CDL-led consortium that will develop the landmark South Beach site in Singapore.
‘This is a new development and we will study this matter, in consultation with our other partners. If necessary, we will respond again in due course,’ a CDL spokeswoman said yesterday evening.
Construction of the 99-year leasehold project – which will have offices, luxury hotels, retail space and residences – has been delayed.
The Government of Dubai has announced its intention to restructure the emirate’s biggest corporate debtor. Dubai World would ask all providers of financing to itself and its affiliate Nakheel to ’stand still’ and extend maturities of the debt until at least May 30, 2010.
In 2007, CDL, Dubai World and El-Ad Group teamed up to buy the South Beach site for $1.69 billion at a Singapore government tender. In November last year, CDL announced a deferment of the project’s construction until construction costs eased.
CDL executive chairman Kwek Leng Beng said in August this year that construction is likely to begin around Q3 2010 with CDL and a new investor, Hong Kong developer Nan Fung, probably the ones that will pump in further money.
El-Ad and Dubai World are likely to be passive investors who may then see their share in the project diluted.
Nan Fung came into the picture in June this year when it subscribed for $205 million of five-year secured convertible notes under a refinancing exercise for a loan on the 3.5-hectare site. CDL also subscribed for the remaining $195 million of the notes.
The consortium refinanced an earlier $1.2 billion loan that matured in June this year by a combination of an $800 million two-year secured bank loan and the $400 million convertible notes.
In 2007, CDL subsidiary City e-Solutions inked a joint venture with Dubai World unit Istithmar to set up a chain of 30 budget hotels across South-east Asia over three years.
The US$50 million joint venture also included Tune Hotels.Com, which was to have developed and operated the hotels. Tune Hotels.Com is owned by the founders of the AirAsia budget airline.
City e-Solutions has since exited the joint venture.
Source: Business Times, 27 Nov 2009