Case Study, Corporate Finance

Debt Restructuring: Leading Master Developer

The team undertook an extensive debt restructuring exercise for the client to address financial stress caused by the real-estate/debt crisis in Dubai in 2011.

Context & Background
A developer with innovative landmark projects in Dubai across the residential, retail, hospitality and leisure sectors. Their developments span more than 15,000 hectares and currently provide homes for over 300,000 people. In the period preceding the debt crisis in Dubai, the company was on a major debt fuelled expansion
spree, leading Dubai’s push with iconic projects.

Key Issues
During the year 2011, the company went through a difficult phase due to the real estate crisis in the global economy leading to fall in revenues and cash flows constraints causing difficulty in debt repayment. The company was not meeting its obligations to the lenders and was going through a wide restructuring exercise
with its bankers.

Scope of Work Delivered
Successful debt restructuring was delivered by executing and implementing the following process:

  • Given that this subset of lenders was secured by a promissory note from a govt body, the restructuring
    was separated from the wider group.
  • One of the lenders had a blocking minority and was blocking the restructuring given its internal
    considerations. This was successfully resolved through negotiations.
  • The facilities were restructured with a 7-year loan, principal repayment was split in 2 instalments one in
    4 and the rest 7 years to match cash flows.

FFC Team Value Add
Leveraging its extensive banking experience, FFC team was able to analyse client’s distressed situation and put together a bankable funding restructure plan. Ability to focus on client’s business holistically and construct a solution from the lenders’ as well as borrowers’ perspective was the key to a successful close. FFC team was able to bring all the lenders to the table and secure their unanimous approval.