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Dubai Holding clears final tranche on time, says no more public debt outstanding

|By Arabian Post Staff| Dubai Holding yesterday confirmed that it will repay the entire outstanding principal, along with accrued interest, of its final and remaining GBP500 million bond, maturing today.

According to an announcement filed with Nasdaq Dubai, this will be the last tranche of Dubai Holding Commercial Operations Group’s multi-currency, Medium-Term Notes Programme issued in 2007. The full repayment will be made from Dubai Holding’s internal resources.

The announcement clarified that following the repayment of the GBP500 million bond, Dubai Holding will have no public debt outstanding.

Dubai Holding, a part of the Dubai Holding Commercial Operations Group, had raised huge sums of debt to fund the emirate’s ambitious projects in the runup to the financial crisis of 2008 and had a big struggle dealing with repayments, which saw lenders even approaching courts.

At the beginning of 2014, the Dubai Group had reached a final deal with creditors on restructuring $10 billion of debt, resolving the last major hangover from the emirate’s financial crisis.

According to Reuters, lenders agreed to restructure about $6 billion of bank facilities while a further $4 billion of debt was to be repaid after bank creditors are satisfied. The agency had quoted a statement by Dubai Holding DUBAH.UL, the investment vehicle of Dubai’s ruler, to this effect.

Lenders to Dubai Group agreed to extend maturity dates to the end of 2016 for secured facilities and to the end of 2024 for partially secured and unsecured facilities. This is intended to buy time for Dubai Group’s assets to recover in value so that some can be sold to meet its obligations.

Dubai Group was one of a number of Dubai state-linked entities which borrowed heavily from banks to fund an acquisitions spree during the boom years.

But as credit markets dried up following the global financial crisis and a crash of Dubai’s real estate market, they found themselves unable to manage their obligations and were forced to renegotiate tens of billions of dollars of debt.

Dubai Group’s deal concluded more than three years of negotiations over its debt pile. Its lenders included big Western banks such as France’s Natixis and top Gulf institutions such as Dubai’s Emirates NBD.

A number of creditors sought a remedy through the courts – a rare occurrence in the Gulf – which resulted in some, including Royal Bank of Scotland and Commerzbank accepting 18.5 cents on the dollar to exit the restructuring process. (With Reuters)