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Middle East
Dubai World agrees $25bn debt plan
Struggling state-run conglomerate announces it has won over nearly all its creditors to debt restructuring plan.
Last Modified: 10 Sep 2010 21:15 GMT
Dubai World, whose interests include seaports and hotels, expects to complete its restructuring within weeks [EPA]

Dubai World has said it has won over nearly all its creditors to a $24.9bn debt restructuring plan, a move that will edge the struggling conglomerate closer to resolving a financial crisis that has dragged on for months.

The state-run company said on Friday that by winning broad support for the revised terms, it should be able to finalise the restructuring process in a matter of weeks.

That will give the sprawling group - with interests ranging from seaports and hotels to luxury retailer Barneys in New York - greater room for manoeuvre in tackling its debts.

"What it means is that Dubai World will have more time to sell off assets and repay creditors and it won't pay punitive rates on this extra time," said Akram Annous, deputy fund manager at Dubai-based investment bank Al Mal Capital.

Dubai World said it had received formal agreements from about 99 per cent of its creditor banks, which represent nearly all the debt involved.

'Fair and balanced'

Sheik Ahmed bin Saeed Al Maktoum, chairman of Dubai's supreme fiscal committee, called the revised terms offered to creditors "a fair and balanced restructuring proposal".

He said the terms would put Dubai World "on a sound and stable financial footing whilst enabling it to realise the full potential of its underlying businesses".

Dubai World's acute credit problems sent shock waves through global markets last November when the company unexpectedly announced that it was seeking new terms on billions of dollars in debt.

That announcement was effectively an admission that the company did not have the cash to cover all its bills.

It reignited fears that the world's financial system remained exposed to immense amounts of debt that would not all be repaid as promised.

John Sfakianakis, chief economist at the Riyadh-based Banque Saudi Fransi-Credit Agricole Group, said winning support for Dubai World's restructuring could help undo some of the damage done to the city-state's reputation and provide a boost to other economies in the region.

"It's definitely a win for Dubai and a win for the creditors as well," he said.

Interest payments and other costs were responsible for pushing the amount of debt needing to be restructured to $24.9bn from an earlier estimate of $23.5bn, according to a source familiar with the plan, who insisted on anonymity as a condition for briefing the media.

Source:
Agencies
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