Dubai: Ducab, owned by Investment Corporation of Dubai (ICD) and Abu Dhabi’s Senaat, will be in the market for a $60 million loan in 2015, the company’s top executive said in an interview on Wednesday.
The cable manufacturer is a building a new facility at a cost of the same amount in Abu Dhabi’s Khalifa Industrial Zone (Kizad) next year. Construction will start in early 2015 with the facility set to open in the fourth quarter.
Ducab is likely to secure the loan from local UAE banks, which, managing director Andrew Shaw said in an interview, show “great support” for the state-owned firm.
Shaw said Ducab traditionally favours sharia compliant loans and was unlikely to consider a sukuk.
“It’s not something we are looking at right now,” he said.
Bank loans have generally been favoured over sukuks in 2014 because they are, for the time being, a cheaper way of financing.
Shaw did not provide specific details on the $60 million loan, including when exactly Ducab plans to secure it. However, he said the unlisted company’s capital needs in 2015, outside the $60 million loan, were “relatively limited”.
Earlier in 2014, Ducab acquired British firm AEI cables. Shaw said the acquisition will contribute Dh200 million to Ducab in the 2015 financial year. He also said the firm was “worried” about the collapse of oil prices in the second of 2014 and the impact it will have on oil-dependent economies.
“Yes we are worried, but it is too early to say [what the impact will be],” he said.
Outside the UAE, Ducab exports to Kuwait, Oman and to countries near the Caspian Sea in Central Asia, which includes oil-wealthy Azerbaijan and Kazakhstan.
Shaw said 20 per cent of Ducab’s business is dependent on supplying oil and gas projects, however, his concerns are over how the drop in oil will impact other sectors including construction.