Dubai World reaches deal over $23bn debt

Published 20th May 2010

Dubai World, Dubai’s debt-laden group, said that it had reached an agreement “in principle” with most of its bank lenders to restructure its $23.5 billion (£16 billion) debt.

“Dubai World is pleased to announce that headline economic terms have been agreed in principle with the co-ordinating committee,” which represents 60 per cent of the group’s bank lenders, it said in a statement.

The deal, which requires no new support from the government, must be approved from banks outside the core negotiating committee, the company said.

The conglomerate’s plans to delay the repayment of $26 billion in debt last November stunned global markets.

A co-ordinating committee of seven banks represented nearly 100 creditors during the negotiations with Dubai World.

The proposal, which offers repayment over a period of five or eight years, allows banks to opt for an option of a higher payment in kind coupon (PIK), a higher government shortfall guarantee, or a higher cash and PIK coupon.

Dubai unveiled a $9.5 billion rescue plan in March for Dubai World and its property unit, Nakheel. The developer, which built a collection of man-made islands in the shape of palms, paid off a $980 million Islamic bond last week.

Martin Kohlhase, assistant vice-president of Moody’s, the ratings agency, said: “It’s an important step to improve the credit environment here in Dubai and the United Arab Emirates. It’s been long awaited. If core banks have agreed, it doesn’t mean that necessarily it’s a signed deal yet. It’s a step in the right direction.”

Source: ' Times '

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