Dubai: Dubai Group, the investment company controlled by Dubai Holding is seeking to restructure its $6 billion (Dh22.03 billion) of loans has set up two bank committees to speed up the process of restructuring.
A source close to the restructuring talks told Gulf News that the two committees are working closely with Dubai Group to reschedule the loans. A Dubai Group spokesperson confirmed the development and said: "There has been significant progress in the negotiations and expect a very positive outcome in the near future."
In the two groups of bankers, French bank Natixis SA's Nexgen unit and Dubai based Mashreq Bank represent the group of secured lenders, whose loans are backed by assets.
Royal Bank of Scotland Group and Emirates NBD lead the other group representing partially secured and unsecured lender. Other members are Union National Bank, Noor Islamic Bank, Al Hilal Bank and Doha-based Commercial Bank of Qatar. The group held its first meeting last week.
"Two groups have been set up to represent the interest of two different set of lenders and make simultaneous negotiations to bring about a quick conclusion to the talks," said a company spokesperson.
The secured lenders have recourse to some of the assets of the company that is good enough to cover the outstanding loans.
Representatives from Mashreq Bank and Emirates NBD were not available for official comments.
"Banks are keen to reach a speedy resolution ahead of the closing of the current quarter. We expect positive outcome," said a banker close to the talks.
A number of Dubai-based companies have been restructuring and rescheduling their debt obligations following the global financial downturn that froze liquidity. While Dubai World reached $24.9 billion loan restructuring deal with more than 70 banks last year, Dubai Holding Commercial Operations Group and Dubai International Capital have been involved in rescheduling and restructuring their debt obligations.
According to a recent estimate by Credit Suisse Dubai and its government related entities together carry at least $129.3 billion of debt, of which $50.2 billion is owed by Dubai World, the company that completed a loan restructuring in September.
Owners
The second-largest debt, $28.9 billion, is owed by the government itself, the bank said in a research report last week.
Investment Corporation of Dubai and Dubai Holding, two other holding companies, as well as other government-related firms, account for the remaining $50.2 billion, according to Credit Suisse.
Recently senior government officials expressed fears of excessive debt burden on Dubai Government. "The current sovereign debt of Dubai is about $30 billion. Different government owned entities have varying levels of operational debts and these are required for ongoing investment programmes and are backed by solid asset bases," Mohammad Ebrahim Al Shaibani, Director General of the Dubai Ruler's Court, told a media gathering in last November.
