Abu Dhabi asks banks to pay $800 mln for airport project guarantees - sources

Tav Havalimanlari Holding

16/03/2021 12:18

By Hadeel Al Sayegh and Davide Barbuscia
    DUBAI, March 15 (Reuters) - State-owned Abu Dhabi Airports
has called on almost 3 billion dirham ($816.82 million) worth of
guarantees issued by local banks on behalf of contractors
working on an airport expansion project already delayed by
several years, sources said.
    The move, which could further delay the project, comes 
ahead of expectations of a global recovery in travel demand
after the coronavirus pandemic.
    It could pressure balance sheets of banks already heavily
exposed to the construction sector in the United Arab Emirates,
sluggish for years amid a slowdown in infrastructure and
property projects.
    Abu Dhabi Airports signed in 2012 a $2.9 billion contract
with a joint venture of contractors comprising Arabtec Holding,
which filed for liquidation in January, Athens-based
Consolidated Contractors Company and Turkey's TAV. 
    The Midfield Terminal project was due for completion in 2017
but has faced delays. It was 97.6% completed in 2019, Abu Dhabi
Airport's CEO Bryan Thompson said at the time. The opening date
has been pushed back to 2021, according to an HSBC report. 
    The company last week called on guarantees issued by United
Arab Emirates lenders Mashreq Bank, Abu Dhabi Commercial Bank
and First Abu Dhabi Bank on behalf of the construction joint
venture, said three sources familiar with the situation,
declining to be named as the matter is not public.
    The request came after a year of funding disputes between
the airport operator and joint venture partners over who should
foot the bill towards a testing phase to determine the
terminal's readiness, said two of the sources, adding the amount
required is a few billion dirhams.
    Abu Dhabi Airports and First Abu Dhabi Bank did not
immediately respond to comment requests. Abu Dhabi Commercial
Bank and Mashreqbank declined to comment.
    None of the contractors responded to requests for comment.
    Some banks have expressed discontent over Abu Dhabi
Airports' request, and recovering funds from Arabtec - which
went into administration last year - could be problematic, the
sources said.
    The deadline for banks to honour the calls on the guarantees
is Thursday, one of them said. 
    The Midfield Terminal, planned to increase the airport’s
passenger handling capacity to 45 million a year, was designed
to complement the growth of Abu Dhabi's Etihad Airways as it
competed with neighbouring global carriers Emirates and Qatar
Airways. 
    State-owned Etihad has since restructured, sold some of its
fleet, and announced plans to become a smaller airline. 
    ($1 = 3.6728 UAE dirham)

 (Reporting by Hadeel Al Sayegh and Davide Barbuscia; Editing by
Bernadette Baum)
 ((Hadeel.AlSayegh@thomsonreuters.com; +971566883310;))