UPDATE 2-Dubai World to meet creditors July 22-sources

* Meeting to outline debt deal to remaining banks

* First all-creditor meeting since December

* Process could take “several more months”

* Dubai World problems a window on indebted emirate

(Adds background)

By Nicolas Parasie and Rachna Uppal

DUBAI, July 11 (BestGrowthStock) – Troubled state conglomerate Dubai
World [DBWLD.UL] has invited creditors to a July 22 meeting to
offer details on its multi-billion dollar debt restructuring,
the first session to include all lenders since December 2009.

Three sources from among the group’s 80 creditors told
Reuters they had received the invitation via the coordinating
committee of seven banks that hold 60 percent of Dubai World’s
$14.4 billion in bank debt.

The flagship state conglomerate, which shocked investors in
November with news it could not pay its debts, will try to
secure wider backing from the meeting for the outline
restructuring deal struck with a coordinating committee of
lenders in May.

The May deal allows banks to get their money back in two
tranches with five and eight-year maturities. [ID:nLDE64J06Z]
Ahead of the crisis the debt was mostly due by the end of 2011

The broader meeting is more than three weeks behind schedule
after creditors were told to expect it in June [ID:nLDE64J168]

Before the financial crisis struck the region, Dubai World
for years expanded aggressively, mostly on borrowed money, until
liquidity dried up and the value of its real estate assets
plummeted.

WINDOW ON INDEBTED DUBAI

Dubai World’s problems opened a window on some broader debt
problems facing the Gulf Arab emirate, hit hard by a region-wide
real estate slump after years of expansion at breakneck speed
through ambitious real estate projects including man-made
holiday islands in the shape of palms.

Last week, the lossmaking main unit of Dubai Holding
[DUBAHC.UL], which groups the personal business empire of the
emirate’s ruler Sheikh Mohammed bin Rashid al-Maktoum, said it
would not be repaying a loan that had fallen due.
[ID:nLDE667080]

Dubai World requires support from lenders representing two
thirds of its debt for the May deal to go through, but is hoping
to gain full backing in order to avoid court proceedings and a
possible delay to the restructuring process.

“We expect some banks to be grumpy and to complain about the
pricing, but then again a majority will likely agree as the
alternative of letting the deal collapse is moving into
unchartered territory,” said one of the sources.

In addition, Dubai World will organise workshops in Hong
Kong, London and Dubai to allow bankers to ask the group’s legal
and financial advisers questions about the terms of the debt
proposal.

Banks unhappy with the deal can file a claim with a special
tribunal set up for the purpose, but legal experts have said
they may be reluctant to pursue legal action in the absence of
any precedents.

After the meeting Dubai World’s creditors will present the
details to their own respective risk committees and approve or
reject the deal within three to four weeks, said a second
source.

A third source said a finalised deal could take a very long
time.

“The process could take several more months after this
meeting. There won’t be any resolution yet. The purpose is
giving information,” the source said.

Dubai World declined to comment.
(Reporting by Nicolas Parasie and Rachna Uppal; Editing by
Andrew Callus and Hans Peters)

UPDATE 2-Dubai World to meet creditors July 22-sources