Dubai World debt deal soon

|TAP Special|  Dubai World will reach a deal on renegotiating its debt repayment schedule soon, Sheikh Ahmed bin Saeed al-Maktoum, chairman of Dubai’s Supreme Fiscal Committee, disclosed.

“I can say for sure we will reach it. It is there and you will hear about it soon,” he told reporters at the sidelines of Ciyscape.

Dubai World had offered creditors a series of incentives to lengthen a $25 billion debt restructuring deal, including shares in global ports firm DP World as collateral.

The company also offered to return cash throughout the loan’s lifespan, more assets as collateral, a higher interest rate and an early repayment of a first tranche of debt due next year. In addition, the Dubai government will make extra funds available to Dubai World.

In return, the firm wanted creditors to grant it more time to meet a second, larger repayment currently due in 2018. In total, around $15 billion of the original renegotiated amount is outstanding after small repayments and the shift of property developer Nakheel to direct government ownership.

ubai’s economy has rebounded strongly from the local property crash which triggered a wave of debt restructurings at state-owned entities at the turn of the decade – most notably Dubai World’s request for a debt standstill in 2009.

However, the $10.3 billion second repayment under a debt plan agreed in 2011 was always regarded as a challenge for Dubai World, given its size and the initial slow progress on asset sales meant to fund the repayments.

Buoyed by economic conditions and the start of small repayments from asset sales, it appointed Blackstone Group as advisor in April and began talks with major creditors to amend the terms.

Agreement has now been secured with the creditor committee of banks which includes HSBC and Emirates NBD over the terms of a new deal and talks are now ongoing with some other lenders, three sources with knowledge of the matter said.