Dubai World secures full approval for $24.9bn restructuring

27 October 2010

Creditor approvals expected to speed up closure of restructuring deal

State-owned conglomerate Dubai World has secured approval from all its creditors for its $24.9bn debt restructuring deal, according to newswire Reuters citing a company spokesman.  

The full approval means Dubai World can now avoid having to process claims through a special tribunal, therefore significantly speeding up the process of closing the restructuring.

US-based distressed debt fund Aurelius Capital Management, the only creditor to have held off approving the deal, sold its $5m outstanding Dubai World liabilities to Germany’s Deutsche Bank, according to a report published in the Financial Times on 27 October.       

Dubai World announced on 10 September that it had received approval from creditors holding more than 99 per cent of the value of its loans.

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”.

The deal marks an important turning-point for the emirate, which has seen investor confidence rocked by Dubai World’s announcement in November 2009 that it was requesting a six-month standstill on its debt.

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 repayment, for the second time, 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.

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