Dubai Group proposes solution to creditors

Dubai: Dubai Group has proposed a new solution to its $10 billion (Dh36.73 billion) debt problem, sources said, reviving talks that stalled more than two months ago.

The company wants to pay as little as 1 per cent interest for an extension of its debt of up to 12 years, sources told Reuters yesterday.

The proposal was sent to lenders on the two creditor committees earlier this week and will be put to all banks at a meeting on April 16.

However, it is unlikely this opening salvo in the new round of negotiations will yield an agreement, the sources said.

Under the plan put forward by Dubai Group, a unit of Dubai Holding, lenders will be offered new terms based upon the level of security they currently hold. Those with assets backing their claims will be offered a better deal.

Proposed tenors run from 3.5 years — for lenders holding debt in the $330 million syndicated loan backed by a stake in Malaysia's Bank Islam — up to 12 years for unsecured creditors, the source said.

Proposed interest rates on the debt will start at 1 per cent for unsecured creditors and increase incrementally for those with assets against their claim, two sources said — although the higher interest rates are still regarded as low.