The Dubai government has announced it will provide $9.5bn (£6.4bn) in funding to help its Dubai World investment vehicle to restructure its debt.

Dubai World's property businesses are heavily indebted

The troubled company has presented a plan to restructure $23.5bn of debt to its creditors, including converting $8.9bn of government debt into equity.

Creditors will now decide on whether to accept the plan.

Dubai World stunned global markets in November last year when it asked for a six-month delay on debt repayments.

‘Strong future’

The restructuring plan also involves a cash injection of $1.5bn from the Dubai Financial Support Fund (DFSF), as well as issuing two tranches of new debt to be repaid over five- and eight-year periods.

Dubai World said it owed $14.2bn to creditors outside the DFSF, and these would “receive 100% principal repayment” through the new debt issues.

“This proposal represents the best possible solution for all stakeholders,” Dubai World said.

“It follows extensive discussions with our creditors, a thorough review of Dubai World’s businesses and significant financial support from the government.”

Sheikh Ahmad bin Saeed al-Maktoum, chairman of the Dubai Supreme Fiscal Committee, said the proposals would ensure that both Dubai World and property company Nakheel were “key contributors to the strong economic future of the Emirate of Dubai”.

“The government of Dubai, acting through the DFSF, will support these proposals with significant financial resources, including a commitment to fund up to $9.5bn in new funding over the business plan period.”

‘Good response’

Analysts said the proposals would be well received by investors.

“It boosts sentiment because this is a strong commitment,” said Ayman al-Saheb at Darahem Financial Brokerage.

He said the companies could now begin “restructuring properly”.

“Information is key in the capital markets, and now that we have received some information, we definitely expect a good response from investors.”

After Dubai World first asked for extensions on debt repayments last year, major global stock markets fell as investors worried about the health of the Dubai economy.

Banks were hit particularly hard on concerns over Dubai’s ability to pay back its debts.

Dubai World is the centrepiece of Dubai’s economy and helped to drive the emirate’s economic expansion.

DUBAI – Government departments have been directed to open their doors to qualified UAE graduates and help hone their skills.

Dubai

His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, on Monday said authorities concerned should coordinate with federal and local governments to absorb the legion of male and female graduates to obviate unemployment in a country enjoying prosperity. He was speaking at the 10^th Annual Careers Show at the Dubai International Convention and Exhibition Centre after being updated on job avenues by more than 100 employers from the public and private sectors.

 He said during a tour of the careers show development projects needed the hands and energy of the country’s human resources to contribute to sustainable development, which would not stop till the targets were reached and construction was complete.

 Organised by the Dubai World Trade Centre — jointly with TANMIA, the Emirates Nationals Development Programme (ENDP), Higher Colleges of Technology, Zayed University and UAE University — the careers show is open till March 30 .

 The show provides the exhibitor with exposure to more people over a shorter periods of time, ensuring a cost-effective promotion and recruiting opportunity.

FRANKFURT (MarketWatch) — Dubai’s government said Thursday it will commit $9.5 billion in new funding to help conglomerate Dubai World restructure its debt. 

Dubai

This will be funded by the $5.7 billion remaining from the loan previously made available from the government of Abu Dhabi and from internal Dubai government resources. Dubai World is trying to restructure $23.5 billion in debt. In a statement on Thursday, Dubai World presented its restructuring plan, which includes converting $8.9 billion of debt and claims into equity and injecting $1.5 billion in cash into the firm to fund its working capital and interest payment commitments.

Two tranches of new debt with five and eight-year maturities will also be issued as part of the proposed restructuring. Dubai World’s creditors will now have to decide whether they agree to the proposed terms. A separate proposal was presented for restructuring the debt of Nakheel, the real-estate subsidiary of Dubai World. Under this proposal, Dubai’s government will provide approximately $8 billion of new money directly to Nakheel to fund operations and settle liabilities.

In addition, the government has proposed to convert its existing $1.2 billion debt claim in Nakheel into equity. “The plan enables Nakheel to offer creditors 100% of agreed amounts owed and to fulfill its obligations to customers through the prompt completion of near-term projects,” the firm said in a statement.

WAM Dubai, Apr 03rd, 2010 (WAM) — Under the patronage of Vice President and Prime Minister of UAE and Ruler of Dubai HH Sheikh Mohammed bin Rashid Al Maktoum, the ceremony to honour the winners of the Dubai Government Excellence Program will be held in Dubai on 13th this month.

Dubai

The ceremony will be attended by a number of sheikhs, ministers, senior state officials government officials and dignitaries.

The Program’s board of trustees has completed the process of assessing the applications made by various government agencies in the Emirate and covered the areas of corporate excellence and excellence in career. The winners will be announced at the ceremony.

Ahmed El-Nuseirat, General Coordinator of the Dubai Government Excellence Program, said that the program is the product of the vision of His Highness Sheikh Mohammed bin Rashid Al Maktoum for making Dubai the city of excellence, creativity and quality.

The program has contributed effectively and tangibly in the development of government performance and improved the level of government services provided to customers, he added.

The Government of Dubai has hit back at criticism from some bank creditors that are unhappy with the terms of the US$24.8 billion (Dh91.08bn) restructuring proposal by Dubai World.

Dubai

A source close to the Government said the banks, which were owed $14.2bn of unsecured debt, were being offered previously undisclosed concessions in the form of guarantees and deferred interest payments.

Since the terms of the restructuring were unveiled last week, some bankers have argued that trade and financial creditors of Nakheel, the conglomerate’s largest property unit, were being offered more favourable terms than the creditors of Dubai World.

On condition of anonymity, a source at the Dubai Department of Finance (DoF) said: “The terms proposed reflect issues such as the different level of security and the legal position of each creditor in each company. Bearing this in mind, they are being treated fairly and equally.”

The new terms illustrate Dubai’s determination to push through the deal in the face of opposition from some of the 97 banks that are owed money.

Privately, sources close to the government are expressing frustration that the banks have not welcomed the deal, which received a generally positive response in international markets.

They argue that as their loans are unsecured, they should be grateful to receive repayment of their principal sums, now backed by “payment in kind” interest arrangements and guarantees to make up any shortfall in repayments.

Payment in kind allows for lump-sum interest to be paid at the end of the loan’s maturity date, rather than by regular interest payments during the loan period.

The “shortfall guarantee” on offer from Dubai World involves making up any shortfall in the value of loans, possibly through a steady programme of asset sales by the borrower in the course of the loan period.

Some bankers were worried that if they accepted interest rates less than current market levels they would be taking a large “haircut”, or reduction in total repayment packages, over the period of the loan.

Most of the bankers’ criticism is directed at the treatment of the two sukuk, or Islamic bond issues, from Nakheel that would be paid on time this year and next if creditors agree.

The DoF believes that delaying the sukuk payout, amounting to nearly $3bn, could derail the whole restructuring.

Building concerns among banks about the terms of the proposals followed a generally positive reaction in the days after they were disclosed on Thursday.

The shifting mood has caused a mixed reaction in local markets. Stocks on the Dubai Financial Market retreated by 2.5 per cent yesterday after a string of gains.

The cost of insuring against the default of Dubai sovereign debt also increased yesterday to 426 basis points, up 6.7 per cent from a low of 399 basis points when the proposals were announced last Thursday.

Despite that rise the cost of insurance is still 38 per cent lower than on February 15, when concerns heightened about the restructuring.

The Dubai World debt restructuring began last November, when the Government said the company would seek a standstill agreement with creditors to delay repayment on $26bn of debt.

Limitless, another property subsidiary, was excluded from the restructuring in Dubai World’s announcement of a proposal to trade creditors and banks last week, lowering the total amount to be restructured to $24.8bn.

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