Dubai World repays $8.2bn of debt two years ahead of schedule

Final payment on bonds was scheduled to take place in September 2022

An Emirati man waves at the crew members of the AIDA prima, the flagship of AIDA Cruises docked at Port Rashid in the Emirati city of Dubai on April 22, 2020. Dubai has welcomed thirteen foreign cruise ships that were at sea while most countries had closed maritime borders due to the coronavirus pandemic, an Emirati official said.  / AFP / KARIM SAHIB
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Dubai World made a $8.2 billion (Dh62bn) final payment to creditors two years ahead of schedule, completing a refinancing programme that began in 2010.

The government-owned entity, which owns DP World and investment company Istithmar Word, said payment of the outstanding amount on the bonds meant it had repaid a total of $18.9bn since the refinancing took place.

This is made up of a principal repayment of $16.9bn to the original lenders, including capitalised PIK interest, in addition to $2bn of cash interest.

“The full repayment represents an important milestone for both Dubai World and for Dubai," said Dubai World's chairman, Sheikh Ahmed Bin Saeed Al Maktoum.

"Throughout the last ten years, Dubai World has met its obligations in full and well ahead of schedule," he said. "We invariably acted transparently, and remained committed, at all times, to the course of action agreed with all parties involved.”

The repayment of the loan amount was achieved through funds received from portfolio companies, including $6bn from Port and Free Zone World; asset sales, the sale of Economic Zones World for $2.7bn; dividend payments from portfolio companies, a $1.6bn dividend from Infinity World; and a new $3bn loan from Dubai Islamic Bank.

“Looking ahead, Dubai World will focus on streamlining and strengthening its efforts to deliver long-term value for all stakeholders," Sheikh Ahmed said.  “Once more, our action underscores Dubai’s commitment to always meet its obligations.”

In February, ports operator DP World said it was delisting from the Nasdaq Dubai exchange in a deal, which would see its parent company Ports and Free Zones World make a $5.15bn payment to Dubai World.

The payment facilitated "discharging outstanding obligations to banks", so that DP World can "implement its strategy without any restrictions from Dubai World’s creditors", the company said.

PFZW said it would fund the deal through a new debt facility, arranged by Citibank and Deutsche Bank.

DP World had also previously paid Dubai World $405m in September 2017 to acquire group entities Drydocks World and Dubai Maritime City – a drydock and a maritime zone close to the city's historic Port Rashid. It also acquired the Jebel Ali Free Zone, which is the emirate's largest, for $2.6bn in 2014.

"The early completion of the refinancing program would not have been possible without the perseverance of [DP World chairman] Sultan bin Sulayem and his team," said Mohammed Al Shaibani, a member of Dubai World's board.

"Their commitment to the process and the joint resolve to make stakeholders whole again has ensured that Dubai World remains a strategic part of Dubai’s economic landscape."

The early repayment of the debt was described as "significant" by Ullas Rao, assistant professor of finance at Heriot Watt University in Dubai.

The move could create "ripple effects across sectors including real estate and tourism, encouraging credit rating agencies to place a positive outlook on the economy", he said.