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$5.2 billion loan for Dubai firms to close next week

LONDON — Syndication of the total $5.2 billion of loans for Dubai World and its subsidiary DP World is expected to close oversubscribed next week, a banking source said yesterday.

Dubai World is raising a $2.7 billion loan to back its plan to buy into MGM Mirage, while DP World, which runs the world's third-largest container port business, is raising a $2.5 billion revolving credit that will be used to refinance the company's existing debt.

Dubai World's 364-day bridge loan pays a margin of 85 basis points (bps) over LIBOR for the first six months, stepping up to 110 bps thereafter. A banking source said the loan will bridge to a bond to pay for MGM. DP World's 5-year loan pays a margin of 45 bps over LIBOR.

Credit Suisse, Deutsche Bank and Royal Bank of Scotland are leading the Dubai World deal, while Barclays, Citigroup, Deutsche Bank and Royal Bank of Scotland are arranging the DP World facility. Dubai World said in August it would invest up to $5.2 billion in MGM, buying about 9.5 per cent of its shares and including about $2.7 billion to acquire a 50 per cent stake in MGM's CityCenter project, a 76-acre Las Vegas development of hotels and retail outlets due to open in 2009.