Dubai and Oaktree team up to restructure Almatis

The sovereign wealth fund and the distressed debt specialist will restructure $1bn of the company’s debt, as well as inject fresh capital. Private equity firms like Advent International and The Blackstone Group have reportedly expressed interest in backing Almatis’ debt restructuring as well.

Dubai International Capital (DIC) has formed a partnership with Oaktree Capital Management to restructure about $1 billion of debt held by Germany-based aluminum producer Almatis.

DIC, a sovereign wealth fund investing on behalf of the ruler of Dubai, Sheikh Mohammed bin Rashid Al Maktoum, owns Almatis. Los Angeles-based Oaktree has been buying the company’s debt and is one of Almatis’ largest lenders.

The firms “will underwrite a full scale balance sheet restructuring of Almatis, which would result in a substantial deleveraging and provide a permanent and stable platform for long-term sustainable growth”, DIC said in a statement.

DIC and Oaktree will inject fresh capital into Almatis as part of the restructuring plan, “to optimise its market position in the face of the current economic uncertainty and to provide management with the capital to take advantage of current opportunities”, DIC said.

DIC has no plans to sell Almatis and intends to remain the largest shareholder in the company, according to a market source.

Almatis has struggled with its debt load for several months. Reuters reported in June the company had reached a standstill with lenders until mid-August on missed debt payments, as the company seeks ways to restructure. Private equity firms have shown interest backing the company’s restructuring plan, including The Blackstone Group and Advent International, according to media reports.

DIC acquired Almatis in 2007, reportedly for $1.2 billion, from Canadian firm Teachers’ Private Capital and European buyout firm Rhone Capital.