The best pay day YTD

[zagor te nej]

 :| xrofl :!: :D 8-) xrotaeye

Dubai Offers Dubai World $9.5 Billion in New Funds (Update4)
2010-03-25 12:02:22.352 GMT


     (Adds comment from Dubai World official in 18th paragraph.)

By Arif Sharif and Anthony DiPaola
     March 25 (Bloomberg) -- Dubai will support Dubai World's debt restructuring with $9.5 billion as the state-owned holding company asks creditors to wait up to eight years to get all their money back.
     The additional funds double to $20 billion the amount the government paid to the emirate's holding company. Dubai World said in November it would seek to delay repaying debt until May, sparking a plunge in developing-nation stocks and doubling the cost to protect against a default by Dubai.
     "This is certainly a step in the right direction toward resolving Dubai's structural issues," said Ali Taqi, portfolio manager at A/T Capital Management in Dubai. Shares jumped the most in a quarter and the cost of protecting against a default by the emirate dropped.
     Dubai, the second biggest of seven states that make up the United Arab Emirates, and its state-owned companies ran up $80 billion in debt until the end of 2008 to transform the sheikhdom into a tourism, trade and financial hub. The International Monetary Fund estimates Dubai has outstanding loans of $109.3 billion. The global credit crunch in late 2008 hampered Dubai- based companies' ability to raise loans, prompting a 50 percent plunge in property prices.

                          Global Crunch

     The emirate is not alone in struggling to finance itself after the worst financial turmoil since the Great Depression.
Greece is engulfed in a fiscal crisis as it tries to cut the largest budget deficit in the European Union. Advanced economies face "acute" challenges in tackling debt in coming years, with the U.S. and U.K. among those that will have debt of more than 100 percent of gross domestic product by 2014, IMF First Deputy Managing Director John Lipsky said March 21.
     Dubai World is seeking to renegotiate $23.5 billion in debt with creditors, it said in an e-mailed statement today. The company said it owed $14.2 billion to lenders other than the government at the end of 2009.
     The restructuring process is "expected to take several months to implement" and subject to approval by creditors, the emirate's Supreme Fiscal Committee chairman, Sheikh Ahmed Bin Saeed Al Maktoum said in a statement today.
     The government will supply Dubai World with $1.5 billion to support its business plan and convert $8.9 billion in debt to equity, Sheikh Ahmed said. Property unit Nakheel PJSC will receive $8 billion in funding and $1.2 billion by converting government debt to equity.

                        'Back on Track'

     The "eventual impact on the Dubai economy is going to be positive as contractors are paid and incomplete projects get back on track," Taqi said.
     Dubai's benchmark index surged 4.3 percent, the most since Dec. 14, to 1,845.21 at the close. Emaar Properties PJSC, developer of the world's tallest skyscraper, increased 8.8 percent, and Emirates NBD PJSC, the U.A.E.'s biggest bank by assets and one of Dubai World's biggest lenders, closed at the highest this year.
     Nakheel's $750 million Islamic bond maturing in January gained 29.5 cents to 94.375 cents on the dollar at 3:18 p.m. in Dubai, according to prices on Bloomberg. Credit default swaps linked to Dubai fell 53.8 basis points to 368.9 basis points, the lowest level since November.

                          Fully Repaid

     Creditors of Dubai World will be fully repaid through new securities maturing in five to eight years, the company said.
The interest rate on the new debt is still under discussion, Chief Restructuring Officer Aidan Birkett said today.
     Dubai won't guarantee the repayment of debt being rolled over and the amount of government support provided should be sufficient, Birkett told reporters. Dubai World is "under no pressure to sell assets," which will be disposed off "at the right value and at the right time," he said.
     Nakheel's bank creditors will be asked to restructure their loans to the company at commercial rates and trade creditors will be offered a cash payment and tradable security. The company's Islamic bonds, or sukuk, due in 2010 and 2011 will be paid on maturity if the proposal receives enough support from creditors, the Dubai government said.
     Limitless LLC, another developer with $1.2 billion in loans due this month, is holding separate talks with creditors, Birkett said.
     "The government announcement is definitely a confidence builder," said Akram Annous, deputy fund manager at Al Mal Capital PSC in Dubai. "The upside surprise is that they will continue to pay sukuk obligations when they come due, which allows them to avoid the hassle of having to deal head on with public investors, something they have been doing with trade creditors and banks."

                        Sukuk Repayment

     Nakheel paid $4.1 billion to settle an Islamic bond in December after Dubai received a $5 billion loan from Abu Dhabi, the U.A.E.'s richest emirate that holds about 7 percent of the world's proven oil reserves. The central bank and two Abu Dhabi- owned banks also lent Dubai's financial support fund $15 billion in 2009 to help state-related companies.
     "There has been an outstanding level of support from the government" and the initial response from creditors has been "positive," Birkett said. "If we fix Nakheel then we can go a long way in fixing the real-estate issues in Dubai."
     U.A.E. Central Bank Governor Sultan bin Nasser al-Suwaidi said March 15 Dubai isn't likely to need more central bank aid.
     The government's support "will be funded by $5.7 billion remaining from the loan previously made available from the government of Abu Dhabi and from internal Dubai government resources," Sheikh Ahmed said in the statement.

                          Biggest Creditors

     More than 90 banks are owed money by Dubai World. Seven of its biggest creditors, HSBC Holdings Plc, Royal Bank of Scotland Group Plc, Lloyds Banking Group Plc, Standard Chartered Plc, Bank of Tokyo-Mitsubishi UFJ Ltd., Emirates NBD PJSC and Abu Dhabi Commercial Bank PJSC, are negotiating with Dubai World on behalf of the lenders, according to bankers.
     Moelis & Co., the U.S.-based advisory firm started by former UBS AG investment banking President Kenneth Moelis, advised the Department of Finance on the Dubai World restructuring. Investment bank NM Rothschild & Sons Ltd. and AlixPartners LLP advised Dubai World. In December, Aidan Birkett, a partner at Deloitte LLP, was appointed Dubai World's chief restructuring officer.