DUBAI: Dubai Festival City (DFC), a unit of conglomerate Al Futtaim Group, is in the process of raising a Dh3.9bn ($1.06bn) loan facility from six banks, two sources with direct knowledge of the deal said yesterday.
DFC is a 1,300-acre shopping, residential and hospitality zone, which includes the emirate’s branch of IKEA. The cash will be used to refinance existing debt as well as fund an expansion of the mall, one of the sources, a Dubai-based banker, said.
The ten-year loan is being arranged by HSBC, with Arab Bank, Emirates NBD, First Gulf Bank , Mashreq and Union National Bank joining the deal, the two sources said, speaking on condition of anonymity as the information is not public.
The Al Futtaim Group is a family-owned conglomerate in the United Arab Emirates that employs more than 20,000 people in over 65 companies, according to its website.
It did not respond to phone and email requests for comment.
The interest rate which Dubai Festival City will pay for the new loan will be 225 basis points over the London interbank offered rate (Libor), the second source said, adding the pricing which DFC was getting from lenders was cheap, especially given the longer lifespan of the transaction.
Companies in Gulf are enjoying cheaper borrowing cost as lenders are forced to cut rates and loosen lending terms to secure business as local banks, flush with cash as their balance sheets recover from the global financial crisis, seek ways to earn a return on their money.
The deal could be completed as early as the first week of December, the first source said.Reuters
