Dubai World sees progress in talks with small creditors
Published: Aug 30, 2010 00:27 Updated: Aug 30, 2010 00:27
DUBAI: Dubai World, which is trying to win creditor support for a restructuring in order to start cleaning up its balance sheet, has begun direct negotiations with small creditors, a report said on Sunday.
The talks with small creditors, who are not members of coordination committee, is aimed at reaching an agreement with all lenders to avoid any lawsuit than may hamper the progress in the company’s debt restructuring efforts, reported Abu Dhabi-based Arabic daily Al-Ittihad, citing unidentified sources.
A Dubai World spokesman confirmed to the newspaper that the conglomerate has entered a new phase of negotiations with the remaining lenders after reaching an agreement with bigger creditor banks. “There is a measurable progress in talks (with small creditors),” he said.
Dubai World’s bank coordination committee, which negotiated with the company on behalf of the other lenders, represents about 60 percent of its bank loans.
The committee comprises Emirates NBD, Abu Dhabi Commercial Bank, Royal Bank of Scotland Group, HSBC Holdings, Lloyds Banking Group, Standard Chartered and Bank of Tokyo- Mitsubishi UFJ.
Details concerning the mechanics of calculating interest rates and proposed schedules for payment are being reviewed with the small group of lenders, added the sources.
The state-owned conglomerate’s canvassing of creditors holding the remaining 40 percent of owed monies is aimed at submitting feedback before Sept. 9 ahead of an Oct. 1 “soft” deadline to complete the restructuring.
A final agreement with creditor banks is expected between Sept. 21 and Nov. 21, said the spokesman of Dubai World, which is prepared to sell prized assets, including ports firm DP World, in a bid to raise as much as $19.4 billion to repay creditors.
According to the restructuring proposal, Dubai World’s total debts are $39.9bn — of which about $14.4bn is being restructured — and does not include $11bn of non-recourse debt attached to the assets of its investment wing Istithmar.
In May, the company agreed in principle with its main lenders on terms to extend the $14.4bn debt in tranches of $4.4bn over five years and $10bn over eight years. It is offering lenders a choice of options to restructure their debt, including an increase in the interest paid on the debt and government repayment guarantees.
Aidan Birkett, the chief restructuring officer for Dubai World, is expected to remain in the role until the end of the year, reported Financial Times quoting sources.
The restructuring talks began in November when Dubai World made a surprise announcement that it would seek a standstill on debt repayments. An initial restructuring proposal was formulated in March, and a more detailed plan was unveiled in May after talks with the big creditor banks.
Dubai and its state-owned companies have racked up $109.3 billion of debt, according to International Monetary Fund estimates, as the emirate transformed itself into a tourism, trade and financial services hub. About $15.5 billion of that is due this year, the IMF said.
