Dubai World Makes No Formal Offer

The meeting between Dubai World and its nearly 90 creditors held on Monday at the Dubai World Trade Centre was a preliminary round to explore potential ways to move forward, said a 
company spokesman.

Speaking to Khaleej Times, a Dubai World spokesman said “it was too early” to ask for a standstill. “At the meeting today, Dubai World did not specifically ask for standstill, but we are keen on seeking a standstill.”

Dubai World also assured that it would make interest payments on its debts until a standstill can be agreed with creditors.

“The purpose of the 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,” Dubai World said separately in a statement on Monday.

British banks, including RBS, Standard Chartered, Lloyds and HSBC, which are believed to be the largest group of foreign creditors exposed to the Dubai debt crisis, were among the creditors that held talks with the conglomerate in the presence of advisers Deloitte, Rothschild and Clifford Chance. “As was confirmed in its statement of December 14, Dubai World will continue to work with financial creditors to seek a standstill in an orderly way,” the statement said.

Dubai World said it had assurances that the Government of Dubai, through the Dubai Financial Support Fund, would provide financial support to cover working capital and interest expenses to ensure the continuity of key projects “as long as a standstill is successfully implemented.”

“Dubai World is committed to working closely with the banks’ appointed Coordinating Committee to work towards a consensual solution for the benefit of all lending banks, trade creditors and other stakeholders affected by the restructuring,” the statement said.

Ahead of yesterday’s meeting, speculation was rife that the embattled conglomerate would formally make a request for a standstill pact with creditors on its $22 billion estimated debt earmarked 
for restructuring. “Providing clarity is clearly the number one priority. Obviously a standstill is not ideal. But a standstill with visibility of when payments will be received or the extent of these payments would be sufficient to call it a result,”
Raj Madha, banking analyst at EFG Hermes was quoted by Reuters as saying.

Monday’s meeting with lenders was subsequent to Dubai World’s November 25 request for a six-month payment standstill on $26 billion of debts linked to the group and its two property units Nakheel and Limitless. The surprise move sent global markets tumbling.

However, a $10 billion support fund from Abu Dhabi last week, the third to Dubai this year, helped Dubai World stave off default on a $4.1 billion Islamic bond from Nakheel due for repayment on December 14. Banking analysts said lenders were unlikely to object to Dubai World’s standstill request.

Dubai introduced new laws on Monday that would allow Dubai World and its subsidiaries to file for bankruptcy, making it easier for corporate debt to be restructured via local courts, rather than relying on sovereign support.

issacjohn@khaleejtimes.com