Dubai World mulls four options of debt repayment

07:58, November 30, 2009      

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Dubai World, one of Dubai's largest and most important conglomerates, is considering four options of repaying its total 59-billion-U.S. dollars debts and liabilities.

Dubai World could still meet the Dec. 14 deadline on the 4 billion dollars payment of a sukuk, or Islamic bond, from its flagship real estate developer Nakheel under one option being considered by advisers to the conglomerate, according to a state-run newspaper The National.

Repayment on schedule is one of four alternatives being considered by Dubai World, which announced Wednesday it would seek a freeze on billions of dollars in debt repayments to bondholders and creditors.

Aidan Birkett of Deloitte, the new chief restructuring officer of Dubai World, is still pondering the options, the paper reported on Sunday.

Last week, Birkett was appointed to oversee Dubai World's reorganization, along with the investment bank Rothschild and the U.S. corporate specialists Alix Partners.

If Dubai World pays back the sukuk, it will solve a problem for the company and its bondholders, and leave open the option of rescheduling bank debt and other liabilities, including bills owed to international contractors, added the paper.

Other options being considered include a scheme to offer bondholders 80 percent redemption of the value of their holdings, with a similar offer made to bankers, the report continued.

Alternatively, Dubai World may move forward with the plan to seek a general "debt holiday" under the terms of last week's standstill proposal, by which payments would be frozen until May 30, 2010 with a view to negotiating a rescheduling of all its debts, it said.

The most drastic scenario for the debt-ridden conglomerate, the paper said, saying it might embark on a general liquidation of assets in response to legal action by creditors.

But this is thought to be a remote possibility, as it is likely to impair the value of Dubai World assets, leaving everyone worse off, noted the newspaper.


Earlier, the Central Bank of the United Arab Emirates (UAE) is "closely watching" events stemming from the Dubai debt crisis to ensure no harm results for the national economy.

Further news would be available until the Central Bank opens Monday, when stock markets in Dubai and Abu Dhabi also reopen following an extended break for Eid al-Adha, a religious holiday observed across the Gulf region.

UAE ministries, government agencies and state companies have been advised to remain on holiday until next Sunday to celebrate the National Day, which falls on Dec. 2.

The government of Dubai, a member of the oil-rich federation UAE, announced Wednesday that it would ask creditors of Dubai World to agree to a debt moratorium of at least six months as a first step towards restructuring.

The announcement, described by ratings agency Standard and Poor's as a default, provided the focus for world financial markets and media Thursday, hitting bank stocks and the price of oil, but lifting the dollar on a day when U.S. and most Gulf markets were closed.

The first move for Dubai World this week will be to formalize its request for a debt repayment standstill, said The National, which runs by the state-owned Abu Dhabi Media Company.

Source: Xinhua
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