Dubai World Says Debt Negotiations Only Cover Real Estate Arm

Posted on December 2, 2009
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Officials in the United Arab Emirates Tuesday to try to reassure investors and the public on the Dubai World debt crisis, and the company itself said it was attempted to include only the liabilities of the troubled real estate developer Nakheel to be renegotiated.

Dubai World said on Monday that negotiations with creditors owed debts of only $ 26000000000 Nakheel, a figure, $ 6000000000 to bondholders instead of Islam includes cover. Discussion to the exclusion of other owners conglomerate – Infinity World, the port and duty-free zone, and Istithmar, its private equity arm – all to put in a good financial base, said the firm.

Talks with creditors began in earnest Saturday, several days after the unexpected decision to delay interest payments. It is expected to draw on for weeks before the final agreement is reached.

Hours after the announcement of the World Dubai, United Arab Emirates President Sheikh Khalifa bin Zayed Al Nahyan, said the country's economy was in good condition and thanked him for the ruler of Dubai, Sheikh Mohammed bin Rashid al-Maktoum.

"We all want our country stronger and better assure want because our economy is fine and enjoying the prosperity of our society," Sheikh Khalifa said, according to Bloomberg News.

"We are strong and persistent," said Sheikh Mohammed reporters.

Sheik Mohammed reportedly caused a reaction in the market for news about Dubai World's restructuring as a sign of "lack of understanding about what happened in Dubai."

Dubai World, the investment arm of the Emirate of Dubai, but separate from the government, said the company has bondholders, which are spread all over the world asked to appoint a committee to guide the conversation.

He also said that it Moelis & Co., an investment boutique of Ken Moelis, the former UBS banker, led hired to be Corporate Counsel. Rothschild also advised Dubai World.

Shares in Dubai and Abu Dhabi fell fell for a second day at noon Tuesday, with the two main index by about 6 percent. On Monday they went to Dubai and Abu Dhabi by 7.3 percent and 8.3 percent. Shares in Asia are generally higher for the second day. Shares in Europe was also trading up.

As if bringing difficult negotiations on the rescheduling, the government reiterated Monday that Dubai is no guarantee of the debt.

Although investors know that Dubai is not officially guaranteed debt, the Emirate of Dubai World is not alone, and many have expected, to guarantee the debt of the agency in an emergency. Well, so many of the owned by Dubai World, mostly homes, has gone south, such as manners, which are legally responsible for such credit does not matter as before.

In negotiations with the creditors, Dubai World has one fundamental objective – the duration of short-term debt prolong ready soon – especially at $ 3500000000 Islamic bond debt 14th December.

In the short term, trying to delay the Dubai World, the payment for six months. In the long run, the people said in the negotiations, which involved be identified because of the complexity of this problem have fallen, the Dubai World, will extend the maturity of the bonds not only them, but most of its debt by an additional five to seven years .

The company hopes that with the fact that real assets, in particular started to generate income, allowing him to pay debts.

To modify the conditions of the Notes, requires creditors agree to Dubai, more or less simultaneously, to reschedule payments, from the delicate task more difficult, given the current concerns in view of the global banking and a deep reluctance of banks to make concessions.

When the negotiations were more heat in recent months, and the deteriorating economic situation in Dubai, one or two banks to go further to demand that paid before bondholders, according to people involved in the negotiations.