Dubai World mulls full debt payoff
Dubai World is weighing two alternatives, including a 'full repayment' option to pay back its debt amounting to more than US$20 billion, media report says. Citing sources close to the negotiations, the Sunday Times said 'a picture was beginning to emerge of how the rest of Dubai World’s debt pile might be repaid.'
Giving details, the newspaper said the company is considering offering two options to creditors, the first could involve full repayment over a long time frame, perhaps 10 to 15 years and the other is a one-off upfront payment at a significant discount.
Government-controlled conglomerate Dubai World, last month, had sought a standstill on its US$59 billion debts but is now left with little more than US$20 billion after it restructured $26 billion and Abu Dhabi loaned it another US$10 billion for its most pressing debts.
The Sunday Times said the ‘full repayment’ option “may be the preferred option among Dubai officials because it is more likely to rebuild the state’s reputation, which has been severely tarnished by the episode.”
On the other hand “some creditors may favour because it means they can take the hit and quickly move on,” the report added. Meanwhile, hundreds of bankers from all over the world will meet high-level representatives of the struggling emirate in Dubai to establish what can be salvaged from the implosion of Dubai World.
Bankers’ meeting
About 100 banks, including several large British financial institutions, that have lent money to Dubai World, would send delegates to the region. They would begin negotiations on a request from Dubai World for a six-month standstill on repayments of more than US$20 billion of debts.A group of the biggest creditors has formed a steering committee, led by the Royal Bank of Scotland.
Citing a debt specialist, Capital Structure, the daily said “British banks are estimated to be owed a combined US$5 billion, with RBS believed to hold the biggest single exposure of US$1 billion to US$2 billion.” The meeting will be the first time all sides have assembled since Dubai World sent shockwaves through financial markets at the end of November with the revelation that it was unable to service its debts, the report added.
