Dubai: The Dubai Government on Wednesday said it will restructure Dubai World, its largest and most diversified investment vehicle that also includes DP World, the world's fourth biggest port operator.
"The Government of Dubai, acting through the Supreme Fiscal Committee (SFC), has authorised the Dubai Financial Support Fund (DFSF) to spearhead the restructuring of Dubai World with immediate effect," a government statement said.
The government has appointed Aidan Birkett, Managing Partner, Corporate Finance at Deloitte as Chief Restructuring Officer (CRO) to "oversee the restructuring process and ensure the continuity of Dubai World's operations", the statement said.
The move comes a few weeks after Dubai World completed its own restructuring and said it was prepared to meet its immediate debt obligations of $3.52 billion — owed by its real estate subsidiary Nakheel.
However, Dubai World yesterday sought an extension in the repayment period to May next year.
"The DFSF, working with the CRO, will start to assess and evaluate the extent of the restructuring required. As a first step, Dubai World intends to ask all providers of financing to Dubai World and Nakheel to "stand still" and extend maturities until at least May 30, 2010," the statement said.
Jamal Majid Bin Thaniah, CEO of Dubai World, told Gulf News recently that the ongoing restructuring will help the organisation withstand the challenges.
Analysts say the government's direct intervention to clean up its books is a good sign.
"It would help the government to take stock of the situation before committing more money," an analyst said, requesting anonymity.
The government has already disbursed most of the $10 billion funds raised through a bond.
Monica Malik, an economist with EFG-Hermes, said, "We had expected a relatively small possibility of a restructuring. With the censuses expecting a repayment of debt obligations of Dubai linked entities, this development is likely to be taken badly by markets."
Dubai World officials were unavailable to comment on the latest move by the government.