Dubai March debt plan to be ‘equitable’ -source

By Amran Abocar

DUBAI, Feb 22 (BestGrowthStock) – Dubai will present an “equitable”
plan to Dubai World creditors next month that does not give
preferential treatment to the government but banks are unlikely
to warm to the proposal, a source familiar with the matter said.

Dubai World, the debt-laden conglomerate whose property
units built iconic landmarks in the Gulf Arab emirate, is in
talks with creditors over restructuring $22 billion in debt.

“The government wants to show it’s handling this in the most
equitable way, everyone gets a fair shot,” a source familiar
with the matter said on Monday.

“We are going to put forward a plan that shares the
recoveries with the lenders.”

The company rocked global markets last November with its
plan to request a delay on repaying $26 billion debt and
narrowly averted default on a $4.1 billion Islamic loan.

It has been negotiating with an unofficial seven-member
coordinating committee of banks from the United Arab Emirates,
Britain and Japan, which combined have about two thirds of total
exposure to the conglomerate.

“Ultimately, it is fully expected the banks will say they
don’t like it,” the source said. “We are putting forward a plan
that’s very very fair.

“There may be some negotiation but it’s not like we’re going
to leave a lot in our pockets.”

No proposal has yet been made to creditors, the person
reiterated. A report last week said the firm may offer 60 cents
on the dollar in a plan of two proposals it may put to banks.

Negotiations over the debt plan will go on as long as
needed, assuming they remain “constructive.”

Dubai set up a bankruptcy framework in December in the event
the company needs to seek protection from its creditors.

Dubai, which funded the company through the Dubai Financial
Support Fund (DFSF), said on Monday it would give up its desire
to be a preferred creditor as a concession to banks.

The DFSF wanted Dubai World security against future aid,
giving it senior status in the event of an insolvency.

The issue was a key stumbling block in talks with creditors.

“That is a concession from the government. We haven’t let go
of our want but we will continue to fund on an unsecured basis,”
the source said, adding: “We’re not going to do this forever.”

“The money the government has … is better used in
restructuring the company.”

Dubai raised $10 billion late last year from Abu Dhabi banks
and the Abu Dhabi government, as part of a $20 billion sovereign
bond programme, and has used about half. It spent $4.1 billion
to pay off the December Nakheel bond.

“The $10 billion raised is all the money that was available
to solve the problem, that is all there is for Dubai World.”

Dubai is paying interest and working capital until a
restructuring is agreed.

Dubai World lenders, both local and foreign, have rolled
over more than $2.5 billion in bilateral loans since May 2008.

Its Limitless unit has a $1.2 billion Islamic loan due in
March which will also get rolled over, people familiar with the
matter said last week. [ID:nLDE61G029]

Investing Research

(Editing by John Irish)

Dubai March debt plan to be ‘equitable’ -source