Dubai will support Dubai World’s debt restructuring with $9.5 billion as the state-owned holding company asks creditors to wait up to eight years to get all their money back.
The additional funds double to $20 billion the amount the government paid to the emirate’s holding company after it said in November it would seek to delay repaying debt until May. That announcement sparked a plunge in developing-nation stocks and doubled the cost to protect against a default by Dubai.
Dubai World is seeking to renegotiate $23.5 billion in debt with creditors. The company said it owed $14.2 billion to lenders other than the government at the end of 2009.
Dubai World and property units Nakheel and Limitless LLC used loans to finance real-estate projects such as palm-shaped islands off the emirate’s coast. They struggled to refinance the projects after the global credit crunch made banks more reluctant to lend.
Dubai will supply Dubai World with $1.5 billion to support its new business plan and will convert $8.9 billion in debt to equity. Nakheel will receive $8 billion in funding and $1.2 billion through the conversion of debt held by the government to equity.
Dubai, the second-biggest of seven states that make up the U.A.E., and its state-owned companies ran up debt to transform the sheikhdom into a tourism, trade and financial services hub. The IMF estimates Dubai has outstanding loans of $109.3 billion, some of it used to fund a property boom that ended in 2008. The seizure of debt markets after the credit crisis hampered the ability of Dubai-based companies to raise loans and led to a 50% decline in property prices.
Dubai World will present creditors a “fair” plan to preserve long-term relations with banks and contractors. U.A.E. Central Bank Governor Sultan bin Nasser al-Suwaidi said.
Nakheel, one of the emirate’s three main state-owned business groups, paid $4.1 billion to settle an Islamic bond in December after Dubai received a $5 billion loan from Abu Dhabi, the U.A.E.’s richest emirate that holds about 7% of the world’s proven oil reserves. The central bank and two Abu Dhabi- owned banks also lent Dubai’s financial support fund $15 billion in 2009 to help state-related companies.
More than 90 banks are owed money by Dubai World. Seven of its biggest creditors, HSBC Holdings Plc, Royal Bank of Scotland Group Plc, Lloyds Banking Group Plc, Standard Chartered Plc, Bank of Tokyo-Mitsubishi UFJ Ltd., Emirates NBD PJSC and Abu Dhabi Commercial Bank PJSC, are negotiating with Dubai World on behalf of the lenders, according to bankers.
The additional funds double to $20 billion the amount the government paid to the emirate’s holding company after it said in November it would seek to delay repaying debt until May. That announcement sparked a plunge in developing-nation stocks and doubled the cost to protect against a default by Dubai.
Dubai World is seeking to renegotiate $23.5 billion in debt with creditors. The company said it owed $14.2 billion to lenders other than the government at the end of 2009.
Dubai World and property units Nakheel and Limitless LLC used loans to finance real-estate projects such as palm-shaped islands off the emirate’s coast. They struggled to refinance the projects after the global credit crunch made banks more reluctant to lend.
Dubai will supply Dubai World with $1.5 billion to support its new business plan and will convert $8.9 billion in debt to equity. Nakheel will receive $8 billion in funding and $1.2 billion through the conversion of debt held by the government to equity.
Dubai, the second-biggest of seven states that make up the U.A.E., and its state-owned companies ran up debt to transform the sheikhdom into a tourism, trade and financial services hub. The IMF estimates Dubai has outstanding loans of $109.3 billion, some of it used to fund a property boom that ended in 2008. The seizure of debt markets after the credit crisis hampered the ability of Dubai-based companies to raise loans and led to a 50% decline in property prices.
Dubai World will present creditors a “fair” plan to preserve long-term relations with banks and contractors. U.A.E. Central Bank Governor Sultan bin Nasser al-Suwaidi said.
Nakheel, one of the emirate’s three main state-owned business groups, paid $4.1 billion to settle an Islamic bond in December after Dubai received a $5 billion loan from Abu Dhabi, the U.A.E.’s richest emirate that holds about 7% of the world’s proven oil reserves. The central bank and two Abu Dhabi- owned banks also lent Dubai’s financial support fund $15 billion in 2009 to help state-related companies.
More than 90 banks are owed money by Dubai World. Seven of its biggest creditors, HSBC Holdings Plc, Royal Bank of Scotland Group Plc, Lloyds Banking Group Plc, Standard Chartered Plc, Bank of Tokyo-Mitsubishi UFJ Ltd., Emirates NBD PJSC and Abu Dhabi Commercial Bank PJSC, are negotiating with Dubai World on behalf of the lenders, according to bankers.
No comments:
Post a Comment