London : Bankers expect Dubai World to make a formal request for a "standstill" on its $26-billion (Dh95.4-billion) debt at Monday's creditor meeting, but it could be more than a month before banks agree, bankers said yesterday.
Banks are expected to support Dubai World's request, but what happens next will depend on the information they receive about its finances, as the scale and complexity of the restructuring exercise puts creditors in uncharted territory.
"You can't bet on it, because anything could happen; it could be anything from a complete write-off to 100 per cent recovery," a senior banker said.
The $10 billion in support funds received from Abu Dhabi will be used to keep Dubai World's debt payments current, but a person with knowledge of the situation said these funds were contingent upon creditors reaching a sensible standstill agreement.
The Emirate's new bankruptcy law, introduced by decree last week, could provide additional incentive to strike a deal.
Additional support
Dubai World's meeting with a group of 90 of its lenders on Monday is expected to lead to a lengthy debt rescheduling involving additional support from Abu Dhabi or the UAE Federation, bankers said.
"We're going to pitch up, hear what they say, give our views, wait for the formal extension request and work on a restructuring," a Dubai-based banker close to the talks said.
With so many lenders and different debt instruments involved, Dubai World is unlikely to issue a single "standstill" agreement, a third banker close to the talks said.
"The initial focus is on bilaterals that expire sooner," the third banker added.
A steering committee of Dubai World's largest lenders met the company on December 7. The panel consists of Standard Chartered, HSBC, Lloyds and Royal Bank of Scotland, Emirates NBD and Abu Dhabi Commercial Bank.
Lenders will take Dubai World's requests back to their credit committees, which are expected to agree to the "standstill" request early in the New Year, several bankers said. A debt restructuring is likely to involve separating Dubai World's companies, they added.
