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Dubai World repayment plan hits obstacle: report
(Xinhua)
Updated: 2010-02-05 20:47 ABU DHABI: Dubai World and its creditors have hit an obstacle in negotiations over a proposed standstill on the state-owned conglomerate's 22 billion US dollars of debt, a leading English newspaper of the United Arab Emirates (UAE) reported Friday. The group announced in November that it would seek to delay debt repayments to 97 banks as part of a plan to give it time to restructure while preventing creditors from pursuing legal action to recover what they are owed, The National said. The banks had yet to agree to standstill proposals from Dubai World and the Dubai Financial Support Fund (DFSF), a government entity set up to distribute the proceeds of a 20-billion-dollar bond program to struggling state-owned firms, informed sources were quoted as saying. According to the newspaper, Dubai World has received about 6.2 billion dollars in aid from the DFSF. A central sticking point in negotiations is the DFSF's plans to take security in exchange for money that it would pump into Dubai World to keep up interest payments once the standstill was agreed to, the sources said. Securing fund injections against Dubai World's assets would make the DFSF a preferred creditor of the conglomerate, moving it in front of banks and other institutions in the company's repayment pecking order, The National said.
"The DFSF has put more than 6.2 billion dollars into Dubai World over the past 12 months," a DFSF spokeswoman was quoted as saying, adding that the injections were provided on "commercially reasonable terms." "The DFSF and (Dubai World) are committed to concluding a mutually acceptable, consensual restructuring," she said. Sources close to the Dubai government said the DFSF and Dubai World had an interest in ensuring that creditors were given a fair shake, given the harm that anything less could have on the government's reputation, according to The National. "The vital question is on what basis do you put money into Dubai World?" a Dubai World adviser said. "It has to be on a normal, sensible basis. All the stakeholders -- the Dubai government, Dubai World, Abu Dhabi and the banks -- would recognize that." A committee of seven creditor banks is leading negotiations with the Dubai government over Dubai World's debt standstill and restructuring proposals, The National said. In November, Dubai, a member of the oil-rich federation UAE, jittered world markets and media after announcing that it would ask Dubai World's creditors to agree to a debt moratorium of at least six months as a first step towards restructuring. |
