Lenders agree to restructure Dubai World's $23.5-billion debt
20 May 2010
Dubai World and its lenders and the Dubai government have reached a deal to enable the debt-stricken group to restructure $23.5 billion of its financial liabilities after it stunned the world last November and asked for a moratorium of at least six months on debt worth billions of dollars. (See: Bank stocks tumble as Dubai seeks moratorium on debt)
Dubai World said post restructuring, it would owe its banks $14.4 billion. Of that, Dubai World will pay $4.4 billion of the loans in five years and another $10 billion over eight years, and will convert about $8.9 billion of debt and claims into equity.
In a statement, the company said, ''As announced on 25 March 2010, the government is converting $8.9 billion of debt and claims into equity (See: Dubai World proposes to convert $8.9 billion debt into equity) and committing to fund up to $500 million of general and administrative expenses and an interest facility of up to $1 billion while maintaining full ownership of the company.
Dubai World, the government-controlled holding company said that the restructuring is for approximately 60 per cent of the bank lenders.
''We are pleased that we have received unanimous support in principle of the coordinating committee on the headline economic terms to our restructuring proposal. This is an important milestone and reflects our efforts to achieve the best possible solution for all stakeholders,'' said Aidan Birkett, chief restructuring officer of Dubai World.
''The proposal puts the company on a sound financial footing and reflects the continued support of the government of Dubai and its lenders. It offers the company the ability to maximise the value of its assets over the medium to long term,'' he added.
The banks that will benefitby agreeing to Dubai World's restructuring of its debt proposal are Standard Chartered, Bank of Tokyo Mitsubishi, HSBC, Lloyds Banking Group, Emirates NBD PJSC and Abu Dhabi Commercial Bank PJSC that collectively hold $8.64 billion in Dubai World.