Monday, 30 November 2009

London Gateway in calls for government aid

Sorry but I missed the full story from Lloyds list and nobody has offered to pay for me to have the full site so this is all I can bring you on this story for now. If anyone would either like to pay for access for me or has the full story please email me Come on Mr Gledhill pay for the site!

A BRITISH local authority has asked government permission to borrow heavily to prop up DP World’s planned £2.3bn ($3.8bn) London Gateway container terminal development, which it openly states “will not be viable without suitable government intervention”.

Business as usual, say Dubai World affiliates

ALL three major maritime industries affiliates of Dubai World are fully confident that they will not get caught up in the flak surrounding their parent concern’s shock debt moratorium request yesterday, in a development that will reassure customers that include many of the world’s top shipowners.

Port in a storm: DP World’s London Gateway struggles for funds
Posted by Miles Johnson on Nov 30 18:25.
The flagship UK development of DP World, the port arm of the troubled Dubai World, looks to be sinking as it struggles to raise financing for the project, based on the Thames at Thurrock in Essex.
The London Gateway project, Dubai’s most significant investment in the UK, “will not be viable without suitable government funding”, according to a local UK government funding application from July seen by FT Alphaville.
While DP World placed the ₤1.5bn container port project “under review” in March amid a painful downturn in global trade, the conclusions of the application will raise further questions over the company’s ability to complete the port scheme.
London Gateway has struggled to secure bank lending to pay for ₤400m of upfront infrastructure costs, according to the application for pilot funding under the government’s “tax incremental financing structure” scheme, first reported by Regeneration & Renewal.
Initial approaches to key UK banks by DP World were “disappointing”, the application letter says, citing conversations with the Dubai company.
Though London Gateway is viewed by the UK government as a valuable development project, any government funding seen to be bailing out DP World may well prove highly controversial.
The letter, sent from Thurrock council to the UK Department for Communities and Local Government, states: “Bank interest in London Gateway is either very limited, or on terms (pricing and tenor) which will severely impact DP World’s equity returns, making the project even more unattractive. ”
When contacted DP World said:
London Gateway remains under review including the financing options. We are exploring a variety of different funding options, one of which was to explore the possibility of London Gateway Park taking part in the UK Government’s open call for pilot Tax Incremental Funding projects, announced in summer 2009. Thurrock Council submitted an application in July to the Department of Communities and Local Government and we await the outcome of that process.
A Thurrock Council spokesman said the council had looked into the possibility of creating an accelerated development zone (ADZ), which was no longer feasible.
The council also cited a DCLG spokesman as saying the ADZ proposal “was always a feasibility study”.
Further evidence of financing problems for one of DP World’s flagship developments coincides with mounting concern over the ability of Dubai-owned businesses to service their debts. Last week the developer Nakheel, owned by DP World’s parent group Dubai World, stunned global markets by asking to delay payments on its debts.
DP World, viewed as one of Dubai’s crown jewels and one of the largest listed companies on the Dubai stock exchange, inherited London Gateway from P&O when it bought the British group for £3.9 billion in 2006.
The company, which owns port assets in locations ranging from Antwerp to Djibouti, has previously told the Financial Times it has no debt maturities due until 2012. Net debt stands at just under $5bn, but DP World holds $3bn in cash.

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