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Lenders See Imminent Dubai World Deal

Issac John / 23 December 2009

Dubai World’s creditors are optimistic of striking a debt restructuring deal with the conglomerate within a month, senior official of a creditor bank said on Tuesday.

The official, who took part in the first round of discussions by Dubai World with its creditors on Monday, said a co-ordinating committee appointed by lenders was expected to negotiate a restructuring accord with the state-owned debtor.

Speaking on condition that he should not be identified, the official of an international lender, said most likely a consensual solution would be presented to more than 90 creditors of Dubai World after January 21.

“The meeting was lengthy and insightful. We are optimistic of a settlement next month. We expect Dubai World to propose a debt repayment standstill up to April or May as the company work out a detailed package of restructuring proposals on its $22 billion of debts,” he said.

Monday’s meeting was in the wake of the announcement by Dubai World about its plans to seek a six-month standstill on debt repayments.

The six-member coordinating committee of creditors includes representatives of four British banks and two UAE banks.

Although no formal proposal for a debt standstill was made at the meeting on Monday, Dubai World hinted out that it was keen to hammer out a deal with creditors. Among Dubai World foreign creditors, Lloyds, RBS, Standard Chartered and HSBC, are believed to have the largest exposure. Analysts said under normal circumstances a standstill proposal would need the consent of all lenders, and it was unlikely that anyone would object to such a plan given the financial support pledged to the conglomerate by Dubai government.

Dubai World said the purpose of Monday’s meeting was “to provide an update to the banks on the development of the group’s restructuring plans as it seeks to reach a standstill agreement with financial creditors.”

Following the creditor meeting, Dubai World said it had governmental assurance of financial support to cover working capital and interest expenses to ensure the continuity of key projects as long as a standstill is successfully implemented. 


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