Debt Restructuring ‘Normal’: Al Mansouri

Debt Restructuring ‘Normal’: Al Mansouri

Dubai World’s plan to restructure its debts is a normal business response that shows the company is moving in the right direction to solve its problems, said Al Mansouri .

By Staff Report

Published: Thu 3 Dec 2009, 8:57 AM

Last updated: Thu 2 Apr 2015, 3:46 AM

The Aria Resort & Casino in Las Vegas, Nevada. Set to open on December 16, it is part of City Center, a 67-acre, $8.5 billion joint project between Dubai World and MGM Mirage.—AFP

The decision by Dubai’s flagship conglomerate to restructure also proves the transparency of Dubai in addressing the concerns of its creditors, UAE Minister of Economy Sultan bin Saeed Al Mansouri said in a statement on Wednesday.

The minister’s statement was his first public comment on Dubai World since the Dubai Department of Finance announced last week that the company would seek a six-month delay in its debt payments.

Dubai World said on Tuesday that it aims to restructure $26 billion of its $59 billion in total liabilities. About $6 billion of the debts to be restructured pertain to an Islamic bond issued by property developer Nakheel, the group said. Nakheel has a $3.52 billion Islamic bond payment due on December 14.

“His Excellency Sultan bin Saeed Al Mansouri, UAE Minister of Economy, stated today (Wednesday) that debt restructuring is a normal business response and the decision by Dubai World to tackle its debts is in the right track and proves the transparency of Dubai in addressing the concern,” the statement said.

Dubai World’s restructuring plan upset international financial markets when it was first announced. Official statements on Monday that the Dubai government does no guarantee the company’s debts added to creditors’ concerns. However, markets have stabilised for the most part so far this week.

Share indexes in Japan, South Korea and Hong Kong rose on Wednesday, while trading in the Gulf and Europe was mixed. UAE stock exchanges, which registered significant losses on Monday and Tuesday, were closed on Wednesday and won’t reopen until Sunday due to the National Day holidays.

Al Mansouri said that Dubai’s economy has made strategic achievements, both locally and internationally, and he emphasised that Dubai is not on its own.

“Dubai is an integral part of the United Arab Emirates, the second-largest Arab economy,” the statement quoted the minister as saying.

“Mr Al Mansouri said Dubai World’s debts do not affect the economic performance of Dubai or the UAE and (that) it is a matter of time before the company restructure(s) its debts and honours its commitments as per a scheduled plan,” the statement said.

He noted that the UAE has already taken “concerted efforts” to meet the challenges from the financial crisis, including the government’s guaranteeing bank deposits for three years and injecting Dh120 billion in liquidity into the banking system. The UAE Central Bank has also injected money into the country’s banks to help forestall local concerns about Dubai World debts, Al Mansouri said.

“On the media response to Dubai World, Al Mansouri said: ‘We are surprised by this negative campaign on the UAE and Dubai. The city has accomplished a strong track-record of growth that would have taken decades for other countries to achieve,’” the statement said.

Dubai World’s creditors have formed a committee comprising six banks that will meet with the company next week, Reuters news agency reported.

The committee includes Emirates NBD and Abu Dhabi Commerical Bank and four banks that are based in Britain — HSBC, Standard Chartered, Lloyds and Royal Bank of Scotland, the report said, quoting a bank executive familiar with the matter. The report could not be independently confirmed.

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