Dubai: Dubai's real estate sector will receive a welcome boost if Dubai World's debt-restructuring proposal is accepted by creditors.
The Dubai Government committed itself yesterday to injecting $9.5 billion into conglomerate Dubai World to help pay off $14.2 billion worth of debt to creditor banks.
Proposals by Dubai World yesterday offer full loan repayment to creditors over five and eight year periods and 100 per cent repayment of property developer Nakheel's 2010 and 2011 bonds.
"The Government of Dubai is taking decisive action to address the challenges related to the global econ-omic crisis and to build the foundation for strong, balanced future growth," Shaikh Ahmad Bin Saeed Al Maktoum, chairman of the Dubai Supreme Fiscal Committee, said.
Internal resources
The support comes largely from the $10 billion given by Abu Dhabi Government last year and also Dubai Government's internal resources, a Government statement said.
Nakheel will be recapitalised by $8 billion, with a $1.2 billion debt-for-equity swap also part of a move to take the property developer off Dubai World's hands and place it with the government directly.
It will also pump $1.5 billion into Dubai World as part of a recapitalisation that would include a $8.9 billion debt-for-equity swap.
The government injection is subject to the proposed plan being approved by 97 creditor banks. Talks are expected to take several weeks as Dubai World secures agreement.
Speaking on the proposal, Aidan Birkett, chief restructuring officer of Dubai World, said: "If agreed, this plan will provide Nakheel with a stable financial footing, enabling it to meet its outstanding obligations to customers and to continue its role in the ongoing development of the UAE real estate market."
The market yesterday welcomed the announcements as Dubai Financial Market rose 4.31 per cent — the highest in recent weeks.
