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Dubai World pays off $8.2b of debt two years ahead of schedule

Issac John /Dubai
issacjohn@khaleejtimes.com Filed on June 30, 2020 | Last updated on June 30, 2020 at 11.15 pm
dubai world, creditors, repay debt

(alamy.com/ae)

Our action underscores Dubai's commitment to always meet its obligations: Sheikh Ahmed.

Dubai World said on Tuesday it made the final repayment of $8.2 billion to creditors more than two years ahead of the due date using funds from asset sales, dividend payments and the delisting of port operator DP World, taking its total repayments to $18.9 billion since 2011.

The payment, made ahead of its September 2022 maturity, was an "important milestone" for the company and Dubai, the state-owned conglomerate's Chairman Sheikh Ahmed bin Saeed Al Maktoum said in a statement.

"Once more ... our action underscores Dubai's commitment to always meet its obligations," said Sheikh Ahmed.

The company made the payment using funds from a new $3 billion loan from Dubai Islamic Bank, asset sales and dividend payments, it said.

"Looking ahead, Dubai World will focus on streamlining and strengthening its efforts to deliver long-term value for all stakeholders," Sheikh Ahmed said.

Dubai World, the government-owned conglomerate with interests in ports, real estate and hospitality, signed a $25 billion debt restructuring agreement in 2011 after Dubai was hit by the global financial crisis.

"We're really trying to get the job done," Mohammed Al Shaibani, the Director General of H.H. The Dubai Ruler's Court, and a Dubai World board member told Bloomberg in an interview. "As soon as we're able to pay, we just do a payment. This is not the first time we pay ahead of time by the way," said Sheikh Ahmed.

Dubai World, the government-owned conglomerate with interests in ports, real estate and hospitality, signed a $25 billion debt restructuring agreement in 2011 after Dubai was hit by the global financial crisis.

"This is a very positive news coming out of Dubai and shows the commitment of the govt to meet its various debt obligations. It augurs well for the debt programs coming out of dubai in the future. It will also certainly help in improving business confidence of investing and doing business lin Dubai," Shailesh Dash, chairman, Gulf Pinnacle Logistics, said.

Dubai World used funds from its subsidiaries to repay the debt, including $6 billion from Port and Free Zone World, $2.7 billion from the sale of Economic Zones World and a $1.6 billion dividend from Infinity World. It also raised a $3 billion loan from Dubai Islamic Bank.

The payment comes as Dubai faces the prospect of restructuring a "significant portion" of $23 billion in loans made to Dubai government-related companies maturing at the end of 2021, according to Fitch Ratings Ltd.

"Honoring commitment on time will increase the trust and defines the future of Dubai," Saad Maniar, senior partner at Crowe UAE, told Khaleej Times on Tuesday.

In February, Dubai World took full control of its port operator DP World in a deal with a $13.9 billion valuation that would help the company at the center of the emirate's 2009 debt crisis to repay some of its borrowings.

DP World, which operates ports around the world, took on $8.1 billion in debt to finance the deal in which Port and Free Zone World, part of Dubai World, acquired the 19.55 per cent of Nasdaq Dubai listed shares for $2.7 billion. Port and Free Zone World already owns 80.55 per cent of DP World ordinary share capital.

As per the arrangement, the subsidiary pays Dubai World $5.15 billion, helping it to meet outstanding obligations to lenders so that DP World can implement its strategy without restrictions. Dubai World subsidiaries face certain restrictions due to agreements with creditors but DP World had been exempt from those restrictions as long as it was listed.

issacjohn@khaleejtimes.com

author

Issac John

Editorial Director of Khaleej Times, is a well-connected Indian journalist and an economic and financial commentator. He has been in the UAE's mainstream journalism for 35 years, including 23 years with Khaleej Times. A post-graduate in English and graduate in economics, he has won over two dozen awards. Acclaimed for his authentic and insightful analysis of global and regional businesses and economic trends, he is respected for his astute understanding of the local business scene.


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