Dubai: Dubai World will service its debts through government financial support, a company spokesperson said on Monday.
"Dubai World will continue to pay interest on its debt obligations until an agreement on standstill [moratorium on its debt obligations] is reached with creditors," the spokesperson said after company officials met nearly 200 bankers representing more than 90 creditors.
The company made a presentation to its creditors in the presence of its advisers Deloitte, Rothschild and Clifford Chance.
"The purpose of the meeting was to provide an update to the banks on the development of the group's restructuring plans as it seeks to reach a standstill agreement with financial creditors," a Dubai World statement said.
Presentation
According to bankers who attended the presentation, the company may seek a wider standstill on obligations in mid-January.
The Dubai Government on November 25 announced the restructuring of Dubai World, appointing Aidan Birkett, a former Deloitte executive, as chief restructuring officer, while seeking a standstill on its debt obligations until May 2010.
Dubai subsequently repaid the $3.52 billion sukuk that matured on December 14 after securing $10 billion from the Abu Dhabi Government.
The Dubai World spokesperson said the company did not reach an agreement on a standstill with its creditors yesterday, but added that it will continue to work to seek a standstill in an orderly way.
As long as a standstill is successfully implemented, Dubai World has assurances that the Government of Dubai, through the Dubai Financial Support Fund, will provide support to cover working capital and interest expenses to ensure the continuity of key projects.
‘Best option'
"Standstill is the best option for Dubai World and the lenders under the given circumstances," the company spokesperson told Gulf News. "While it gives adequate time to the company to restructure, debt will be serviced to keep the banks reassured," he said.
"Dubai World is committed to working closely with the banks' appointed coordinating committee to work towards a consensual solution for the benefit of all lending banks, trade creditors and other stakeholders affected by the restructuring," the company said.
Creditors form panel
The 90 creditors of Dubai World yesterday set up a committee to steer the process of standstill agreement.
According to banking industry sources, HSBC Holding Plc, Lloyds Banking Group Plc, Royal Bank of Scotland Group Plc, Standard Chartered Plc, Emirates NBD and Abu Dhabi Commercial Bank are the members of the creditors' committee that will directly negotiate with Dubai World and its advisors on behalf of the lenders.
Bankers who spoke to Gulf News after the meeting said that it is unlikely to reach any agreement on the terms of the loan restructuring before the end of this year. However, many were optimistic about an early resolution of issues in a mutually beneficial manner.
"We are not expecting a default scenario. Many bankers should be willing to re-negotiate the terms of the loan and probably extend the term of the loans to Dubai World but there should be a price attached to it," said a banker.
