Business | General

Dubai World closer to deal

Discussions shift towards extending maturity of existing loans and bonds

  • Zawya Dow Jones
  • Published: 00:00 March 12, 2010
  • Gulf News

Dubai World logo
  • Image Credit: Supplied
  • Uncertainty over the outcome of talks between creditors and Dubai World has weighed on the emirate since late November when the need to restructure the conglomerate was first announced.

Dubai: Talks between Dubai World and its creditors over $22 billion (Dh80.7 billion) of debt have shifted towards extending the maturity of existing loans and bonds, bankers familiar with the matter said.

"They agreed to keep paying interest on the debt and to reschedule maturities of the principal," a senior banker at a local creditor told media yesterday. "The conglomerate needs to maintain a good long-term relationship with lenders."

Exposure

It was feared that Dubai would try and force creditors into taking a 40 per cent "haircut" on their exposure to Dubai World, but these initial discussions were universally rejected by lenders, the bankers said.

The Dubai Finance Department, which is involved in the Dubai World restructuring, denies such terms were ever discussed.

"Banks can't handle a ‘haircut'," said another senior local creditor who has been briefed on Dubai World's restructuring programme.

"We're willing to extend maturities but not incur losses on our investments."

A spokesman for Dubai World declined to make any comment.

Uncertainty over the outcome of talks between creditors and Dubai World regarding $22 billion of debt — equal to almost half the UAE's estimated oil revenue last year — has weighed on the emirate since late November when the need to restructure the conglomerate was first announced.

Shares on the Dubai Financial Market are about 20 per cent lower since Dubai's Government was forced to intervene on behalf of the state-owned conglomerate.

The last week has seen representatives of Dubai World hold informal meetings with creditors in London and Dubai as both sides edge towards a deal.

Committee

A steering committee that represents about 90 creditors includes Standard Chartered, Royal Bank of Scotland Group, HSBC Holdings and Lloyds Banking Group.

Business services company KPMG is representing the steering committee.

"The restructuring has entered the final phases," said another banker familiar with negotiations. "We agreed on the terms and now have to discuss it with the other banks."

Major creditors are hopeful that the terms of formal deal will be made public next week.

A Department of Finance spokeswoman could not be reached for comment.

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