Dubai: Dubai World, the state-owned holding company seeking to reschedule $26 billion (Rs1.2 trillion) of loans, may need more than six months to complete its restructuring, a government official said.
The six-month period will be short for a complete restructuring, Abdulrahman Al Saleh, director general of Dubai’s department of finance, told Al Arabiya TV channel on Tuesday. The focus at this stage will be on the borrowers and contractors.
Dubai World, whose property unit, Nakheel PJSC, has a $3.52 billion Islamic bond due on 14 December, said on 25 November it would seek a standstill agreement from creditors and an extension of loan maturities until at least 30 May. On Monday, Dubai World held talks with its six main creditors including HSBC Holdings Plc and Royal Bank of Scotland Group Plc, a banker familiar with the negotiations said.
Al Saleh said the government has given Nakheel about 9 billion dirhams (around Rs1,1350 crore) from the emirate’s support fund since the onset of the credit crisis. A spokesman for the department of finance said that the 9 billion dirhams were provided as part of the first $10 billion tranche of bonds sold by Dubai to the United Arab Emirates central bank.
“We would like to emphasize the difference between support and guarantees,” Al Saleh said. It was clear since the company’s establishment that it’s not guaranteed. However, it received a lot of support from the government initially with large plots of land in unique areas of Dubai. It later received direct aid from the emirate’s support fund, he said.
Dubai World has assets and income to meet its debt obligations, and most of its lenders are committed for the long term, Al Saleh told Al Arabiya. The firm’s main lenders also include Emirates NBD PJSC, Abu Dhabi Commercial Bank PJSC, Standard Chartered Plc and Lloyds Banking Group Plc.
Most lenders, especially banks, are committed for the long term, Al Saleh said. This is what interests them and is also what we sense from them.
Dubai World had $59.3 billion in total liabilities at the end of last year, Nakheel told the Nasdaq Dubai bourse on 20 August. The company’s total assets stood at $99.6 billion at the end of 2008 and revenue was $14.2 billion.
Al Saleh dismissed rating downgrades of Dubai companies. “These rating agencies have not communicated with the government and didn’t ask if the support was given or not,” he said. “This perhaps is a unilateral decision on their part.”
On Tuesday, Moody’s Investors Service cut the credit ratings for the six Dubai government-related issuers, including DIFC Investments and Dubai Electricity and Water Authority. The downgrades followed similar action by Standard and Poor’s.
Al Saleh said he believes debt markets will receive Dubai again. “I think the media’s reaction has been exaggerated,” he said.
Camilla Hall contributed to this story.