Dubai World creditors agree to restructuring proposal

Dubai: Dubai World announced that it has come to a formal agreement with over 99 per cent of its creditors to restructure approximately $24.9 billion of its liabilities.

"This overwhelming support means that the company is well-positioned to close the restructuring in the coming weeks," the group said in a statement. "The proposal puts the company on a sound financial footing, enabling it to realise value for the benefit of all stakeholders."

A person with knowledge of the negotiations told Gulf News that the paperwork for the deal "is largely done". This gives Dubai World the possibility "to move ahead".

The timeframe for the repayment of the debt has been set between five to eight years.

Asked if Dubai World might sell parts of its core assets to serve the repayments, the source said that "the company has this option, but it depends." However, recent media reports that Dubai World would sell its ‘crown jewels' such as DP World were "naive rumours."

There was only one unnamed creditor who opposed the proposal.

Shaikh Ahmad Bin Saeed Al Maktoum, Chairman of the Dubai Supreme Fiscal Committee, said that "this agreement formalises a strong consensus around a fair and balanced restructuring proposal and is a key step towards putting Dubai World on a sound and stable financial footing whilst enabling it to realise the full potential of its underlying businesses."

The deal is an "important milestone," he added.

The Dubai Government reiterated that it "remains a supportive and committed shareholder". It said it will continue to focus on Nakheel.

"This puts an end to the question whether Dubai World will be able to restructure its debts or not," Amro Diab, head of GCC institutional sales, EFG-Hermes, told Gulf News. "It is a very positive signal for the market."

"The agreement is one major step to recovery," Jan Willem Plantagie, analyst with Standard & Poor's in Dubai, said. "However, it remains to be seen how much debt the banks will be forced to write off. It is positive news for investors although there are many other factors that have an impact on the regional trading sentiment, depending on what happens in the world markets."

Over 99% of lenders agree to restructuring

Dubai World's main lenders include Royal Bank of Scotland Group, HSBC Holdings, Lloyds Banking Group, Standard Chartered, Bank of Tokyo-Mitsubishi UFJ, Abu Dhabi Commercial Bank and Emirates NBD.

Dubai World's subsidiary Nakheel said on July 14 that a group of creditors unanimously supported a plan on altering the terms on $10.5 billion of loans and unpaid bills.

Nakheel expects to pay 40 per cent of the debt in cash and 60 per cent through a tradeable sukuk. Nakheel will be separated from Dubai World during the restructuring.