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Hedge fund wins claim against Dubai's Drydocks

By Praveen Menon

DUBAI, MARCH 14 - A U.S.-based hedge fund said it has won a $72 million legal claim against Dubai's Drydocks World for defaulting on a loan, putting the ship builder's $2.2 billion debt restructuring in further trouble.

Monarch Alternative Capital said in an emailed statement that Drydocks, a unit of Dubai World , has been ordered to pay the entirety of the sum of £45.5 million ($71.6 million) claimed plus Monarch's legal costs.

Monarch sued Drydocks last year in the High Court of London casting a blow to the restructuring talks.

A week ago, Drydocks proposed repaying creditors in five years and said it was seeking more working capital as it tried to restructure a $2.2 bln loan facility, ending lengthy and complex debt talks.

The restructuring had been scheduled to be completed by April 2011, but it was slowed by a lack of government support and opposition from hedge fund creditors, including Monarch.

When asked how the judgment would affect its restructuring Khamis Juma Buamim, Drydocks World chairman, said:

"As made clear at all lender meetings, the company is confident that it can still implement its restructuring if it transpires that Monarch do not accept the terms on offer."

"But I would very much hope that notwithstanding their legal action Monarch will accept the very reasonable restructuring proposal."

DEBT TALKS

Drydocks World's debts stem from a multibillion-dollar loan it took out to fund expansion in Singapore. Drydocks has its major ship and rig building facilities in southeast Asian countries such as Singapore and Indonesia.

The $2.2 billion facility, taken out in October 2008, comprised a $1.7 billion three-year loan paying 170 basis points and a five-year $500 million loan with a 190 basis point margin, according to Thomson Reuters data.

Bookrunners on the 15-lender syndicate were BNP Paribas , HSBC , Mashreq , Standard Chartered and Lloyds Banking Group among others.

Presence of hedge funds is seen complicating debt restructurings in the Gulf Arab region, where previous negotiations have been bank-only affairs.

Another U.S. hedge fund manager Davidson Kempner Capital Management is part of the creditor committee for the $1.1 billion debt restructuring at Bahrain investment house Arcapita , the first time a fund has fulfilled such a role in the region.

($1 = 0.6355 British pounds)

(Additional reporting by Mirna Sleiman, Editing by Matt Smith, Dinesh Nair)

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