State-owned conglomerate Dubai World has received approval from over 99 per cent of creditor banks to restructure its $24.9bn debt, with final closure expected in the next few weeks.
“This overwhelming support means that the company is well positioned to close the restructuring in the coming weeks,” Dubai World said in a statement published on 10 September.
The agreement required the approval of lenders representing two thirds of the value of loans. It has been overseen by a seven-member co-ordinating comittee representing the 100-odd financial creditors to Dubai World.
Dubai World will first repay the interest on loans to creditors and then the loans themselves in instalments, Ahmad Humaid al-Tayer, a member of Dubai’s fiscal committee, told the Arabic daily newspaper al-Bayan in an interview published on 11 September.
Al-Tayer said the order of repayment of loans would “depend on the nature of each loan as some of the loans are consolidated credits, while some are bilateral and some are bonds.”
“This agreement formalises a strong consensus around a fair and balanced restructuring proposal and is a key step towards putting Dubai World on a sound and stable financial footing while enabling it to realise the full potential of its underlying businesses,” said Sheikh Ahmad bin Saeed al-Maktoum, chairman of the Dubai Supreme Fiscal Committee.
The deal marks an important turning-point for the debt-laden emirate and is expected to play a key role in boosting confidence in its economy. Dubai World’s announcement in November 2009 that it was requesting a six-month standstill on its debt sent shockwaves through global financial markets.
Dubai’s debt woes are far from over. On 7 September, Dubai Holding Commercial Operations Group (DHCOG), the main unit of state conglomerate Dubai Holding, delayed for the second time repayment on a $555m loan until 30 November.
The property development unit of Dubai World, Limitless, is still negotiating a debt restructuring resolution on its $1.2bn Islamic loan, following an extension in March this year.