DUBAI: A unit of Dubai Holding, the investment vehicle of the emirate's ruler, said on Thursday it was in talks with lenders to raise a syndicated loan, with banking sources adding the facility could be worth up to 4 billion dirhams ($1.1 billion).
TECOM Investments, a business park operator and one of the key assets of Dubai Holding, is expected to use the proceeds for its growth plans, while some of the cash would also be diverted to the parent company, one of the sources said.
TECOM said in a statement to Reuters it was seeking to raise a loan facility and the funds would be used to "support future growth opportunities and other strategic objectives".
It declined to comment further.
TECOM is close to finalising the group of banks that will arrange the loan and it intends to complete the deal this year, the sources said, asking not to be named because the information isn't public.
The loan will have a lifespan of between seven and eight years and will have an amortising structure, the first source said.
Under an amortising deal, the borrower repays parts of the loan throughout the duration, as opposed to a bullet schedule which only requires interest payments to be serviced.
TECOM operates 11 business parks in the emirate including the Dubai Media City and Dubai Internet City.
It announced plans to build a new development last month with 440 luxury villas and is also building the Dubai Design District that would house global fashion brands.
Dubai Holding, which also owns luxury hotels group Jumeirah, was one of the state-linked entities that borrowed heavily from banks to fund growth and acquisitions during the boom years from 2006-08 and was hit when a property bubble burst.
One of its other units, Dubai Group, completed the restructuring of its $10 billion debt in January, one of the last major hangovers from the emirate's financial crisis.
The holding is now reviving its growth plans with chief executive Ahmad bin Byat saying the company would need $6.8 billion to build "Mall of the World", an entertainment district that would include the world's largest shopping mall. (Reuters)