Dubai: Dubai Holding is expected to successfully conclude the restructuring of the Dh36.7 billion ($10 billion) debts owed to its subsidiary Dubai Group with a number of creditors, as it awaits creditors’ response on the deal.
“I am happy to announce that the issue of restructuring the liabilities of $10 billion with the creditors attached to Dubai Group is almost behind us,” Ahmad Bin Byat, Chief Executive of Dubai Holding, told Gulf News in an exclusive interview.
Dubai Group has sent its offer to the creditors who are expected to respond in the next few weeks.
The debt restructuring includes asset sales, though Dubai Group does not expect to dispose of any of its major assets this year, according to earlier news reports. Its assets include a 14.7 per cent stake in Oman’s top lender, BankMuscat, and 18 per cent of Egypt’s EFG Hermes. Dubai Group also owns part of Borse Dubai, which holds 20.6 per cent of the London Stock Exchange.
In April, Dubai Holding’s business group, Dubai Holding Commercial Operations Group, announced that its 2012 net profit increased to Dh1.2 billion.
Bin Byat said Dubai Holding is out of the crisis now and is in a position to expand business across its verticals. “As of early May, the issue of debt restructuring is behind us and we now have a clear road map to move ahead from the crisis. It is a significant relief for us and it will allow us to grow now,” he said.
“This demonstrates that Dubai is closing all pending issues as far as debts and liabilities are concerned and reflects the government’s determination to solve the issues at hand. This is positive for investor confidence as reflected in our capital markets and the increased investment and development activities even in the property market.”
The move is in line with the observations made by the International Monetary Fund (IMF) on the Government-related entities (GREs) last year.
“The GREs continue to face financial challenges in light of their high debt and rollover needs. Further deleveraging and strengthening of impaired GRE balance sheets is needed,” the IMF said in its Article IV Consultation with the UAE. “Improving GRE corporate governance and increasing transparency about their financing strategies, financial conditions, and debt profile would be important to strengthen market confidence.”
Despite the challenging situation, some of the group’s more successful businesses have continued to expand, such as Jumeirah Group and Tecom Investments. Byat said, his organisation would start looking at some of the stalled projects to restart in different parts of the world. “We are considering reviving the Lagoons project, among many others,” he said.
Established in 2004, Dubai Holding is a global investment conglomerate with interests in 24 countries. Employing 15,000 people from 121 nationalities, it is managed through two business groups: Dubai Holding Commercial Operations Group (DHCOG) and Dubai Holding Investment Group (DHIG).
DHCOG develops and manages hospitality, business parks, real estate and telecommunications under four operating units include Jumeirah Group, TECOM Investments, Dubai Properties Group and Emirates International Telecommunications.
DHIG oversees Dubai Holding’s financial assets including investments and diversified financial services through Dubai Group and Dubai International Capital.
The group was undergoing an ambitious growth and expansion in a geographical reach stretching from the UAE to Morocco when the global financial crisis hit in 2008, forcing it to reconsider and halt a large chunk of its development activities.
Following the crisis, the company has come back strongly – almost out of the woods – with Dh1.2 billion net profits recorded on Dh9.2 billion revenues last year.
At the end of the last year, DHCOG’s total assets stood at Dh86.33 billion. It concluded the year with a healthy cash balance of Dh1.7 billion.
Total DHCOG debt currently stands at Dh11.7 billion, a reduction during the course of 2012 of Dh1.1 billion, thereby improving the debt to equity ratio to 0.80. It had also settled contractor liabilities of Dh2.1 billion, thereby reducing liabilities by 20 per cent.
Its turnaround has helped rating agencies – Moody’s and Fitch Ratings – to reaffirm their stable outlook for DHCOG in 2013.
Bin Byat said Dubai Holding will now look at some of its projects to kickstart. “We are currently looking at our real estate projects in Oman, Tunisia and Kochi in India to and will decide on increasing our engagement in the development of these projects based on economic and market conditions,” he said.
