Dubai Government has authorised the release of $4.1b which will be used to pay Nakheel’s sukuk.
A statement from the Dubai Financial Support Fund said that the government of Abu Dhabi and the UAE Central Bank had provided $10b in support.
Dubai Government is also expected to announce legal steps which will allow Dubai World to restructure completely.
The statement also added that the UAE Central Bank would provide support for local banks.
The news comes on the same day that Nakheel's $4 billion (Dh14.6 billion) sukuk had been due to mature. It had originally asked for a deferment on payment of the bond on November 25.
A statement from Shaikh Ahmad Bin Saeed Al Maktoum, Chairman of the Dubai Supreme Fiscal Committee said: “The Government of Abu Dhabi has agreed to fund $10 billion to the Dubai Financial Support Fund that will be used to satisfy a series of upcoming obligations on Dubai World.
“As a first action for the new fund, the Government of Dubai has authorized $4.1 billion to be used to pay the sukuk obligations that are due today."
He added that the remaining funds will also "provide for interest expenses and company working capital through April 30, 2010" but only on the condition that Nakheel negotiates a standstill on it's future debt repayments.
Dubai World welcomes support
Dubai World welcomed the support, saying that it provides "Funding and a stable basis for the restructuring process which continues."
A statement added that: "Dubai World will continue to work with financial creditors to negotiate a standstill in an orderly way. As long as a standstill is successfully negotiated, Dubai World has assurances that the Government of Dubai, through the DFSF, will provide financial support to cover working capital and interest expenses to ensure the continuity of key projects.
"Dubai World is committed to regular, direct and timely communications which it believes will yield the best outcome for all stakeholders."
Strong and vibrant global financial centre
Shaikh Ahmad Bin Saeed Al Maktoum, Chairman of the Dubai Supreme Fiscal Committee (SFC) reassured investors, financial and trade creditors, employees, and citizens all out support of the government and has said that Dubai is, and will continue to be, a strong and vibrant global financial centre, adds WAM.
"The Government of Dubai remains committed to its high standards and its obligations. We are confident in our economic model, and we are confident in the long-term health and outlook for our economy", he said in a statement on Monday.
"The actions taken today are consistent with our market development, and we believe they are the actions that will best serve the interests of all stakeholders," he added.
Sultan Bin Saeed Al Mansouri, UAE Minister of Economy, said about the latest developments, "The issue has been resolved proving our leadership has the will and the means to solve our problems. We have no problem moving our economy in the right direction."
tagsUnited Arab Emirates
This is an excellent news for all. The timely support given by Central bank will go a long way in improving and stabilising confidence of investors and business community. The wild rumours making rounds in the international financial markets; mainly due to huge negative hype (for Dubai's financial capacity) created by western media since November 25; should be put to rest.
Atul Shukla14 December 2009 19:18jump to comments