Dubai World reaches agreement over debt

09:48, May 21, 2010      

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Dubai's embattled group Dubai World, whose default fears rocked global markets this year, said Thursday that it had reached an agreement "in principle" with most of its bank lenders to re-structure some $23.5 billion in debt.

The agreement still needs the backing of other lenders but appears to give heavily indebted Dubai some breathing room in dealing with the obligations of its state firms.

"Dubai World is pleased to announce that headline economic terms have been agreed in principle with the Coordinating Committee" representing 60 percent of the group's bank lenders, the company said in a statement.

According to the agreement, the company will divide $14.4 billion of debt into two tranches, maturing in five and eight years respectively, while the government will convert $8.9 billion of aid to the company into equity.

The first tranche of debt will be valued at $4.4 billion, while the second will be worth $10 billion, it said.

The government will maintain 100 percent ownership of the company, it added.

"This is an important milestone and reflects our efforts to achieve the best possible solution for all stakeholders," Chief Restructuring Officer of Dubai World Aidan Birkett said.

Dubai World's lenders include four British banks - HSBC, Lloyds, RBS and Standard Chartered, which are believed to have an exposure exceeding $5 billion.

Regional lenders are led by Abu Dhabi Commercial Bank and Dubai's Emirates NBD bank.

Dubai World's total debt, including liabilities, is around $60 billion. Dubai's total debt is estimated at between $80 billion and $100 billion, although some analysts say it could be as high as $170 billion.

Markets in the United Arab Emirates gave a weary welcome to a long-awaited debt deal, with investors worried about a sluggish economic recovery and fallout from Greece's debt problems.

Source: Global Times


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