Dubai Holding restructuring under way

Dubai/London: The restructuring of Dubai Holdings is taking place and will include injections of fresh government funds, the vice chairman of Dubai's top fiscal body told the Financial Times.

Mohammad Al Shaibani, who is also the director of the Ruler's Court, said in an interview that the government had so far pumped $2 billion (Dh7.345 billion) into the conglomerate.

A year ago, Dubai's other flagship state-owned conglomerate, Dubai World, asked for a standstill agreement on $26 billion worth of debt. The group reached a restructuring agreement in September.

Creditors

A total of 70 per cent of the banks involved are the same as those in the Dubai World restructuring process, Shaibani said. Dubai World's bank creditors includ HSBC, Lloyds, Standard Chartered and Abu Dhabi Commercial Bank.

Shaibani said Dubai Holding's issues were "not the size" of Dubai World's, but that its restructuring process was underway, led by Dubai's supreme finance committee.

Analysts have put Dubai Holding's total debt at between $12 billion and $15 billion.

Asked if the restructuring process for Dubai Holding would include injections of fresh funds and banks accepting haircuts on their loans, Shaibani said:

"It is always like this, yes. The basic scenario, everybody has to chip in, everybody has to contribute, keeping in mind the long-term relationship."

Andre Andrijanovs, an analyst at Exotix, said indications that $2 billion had been pumped into Dubai Holding were "a good sign".

Aside from Dubai Group, Dubai Holding includes private equity firm Dubai International Capital and real estate group Dubai Holding Commercial Operations Group (DHCOG), which are also being restructured.

Shaibani said banks could expect to win advisory deals as the government considered future asset sales and privatisations.

"Priority will definitely go to banks that have been very supportive - we are very loyal customers," he said. "A lot of the Dubai-based companies are performing really well; it is only the international exposure that was giving us a bit of a challenge."

Shaibani said Dubai still faced challenges in terms of tackling its debt and recovering from the financial turmoil that has engulfed the Gulf tourism and trade hub since 2008.

"There are still a lot of challenges. Each time we say it is over, something comes up, whether it is government issues or company-related issues," he said.

Government debt

He said the specific Dubai government debt stood at a total of between $36 billion and $38 billion.

Shaibani said most of Dubai's companies would be able to service and repay their debts: "When you break it down to individual companies it is double. These companies are more than capable of handling their debt situation."

A $1.25 billion Dubai bond issue in September marked the emirate's return to debt markets. The four times oversubscribed issue challenged predictions that Dubai would have trouble tapping credit markets as the emirate and its companies climbed out of their debt hole.