Dubai World has won unanimous creditor approval to amend and extend terms of US$14.6 billion in debt repayments.
The conglomerate last month filed a company voluntary arrangement (CVA) in the Dubai World Tribunal to push through its plan in the face of dissenting creditors including Lloyds and RBS.
However Dubai World’s lawyer, Adrian Cohen of Clifford Chance, said at a hearing at the tribunal yesterday that 100 per cent of creditors had now signed binding agreements committing themselves to the conglomerate’s debt restructuring process.
The CVA proceedings are expected to be formally discontinued by May 10, by which time all creditors are expected to have signed new agreements.
“Everyone has now signed up to the debt optimisation proposal in the form of substantively agreed documents,” Mr Cohen said.
The signature of lock-in agreements by all creditors was “excellent news” for both Dubai World and local banks, according to Mohammed Ali Yasin, managing director of NBAD Securities in Abu Dhabi.
The new agreement is a restructuring of a deal struck in 2011, as Dubai World seeks to renegotiate agreements to secure more favourable terms in the wake of Dubai’s recovering fortunes.
"Ongoing uncertainty over Dubai World and its debt was one of the biggest legacies of the financial crisis of 2008-09," Mr Yasin said. "The fact that we can now close this chapter with the banks is great. It means that banks can make substantial reversals in the way that they classify loans on their balance sheets, which will have a very important impact.
Mr Yasin said that with the risk of default reduced, Dubai World and other government-related entities would be able to continue to access financial markets, and at a more reasonable price.
The ratings agency Moody’s Investor Services this month described the restructuring of Dubai World’s debt as “credit positive” for local banks, especially the conglomerate’s largest creditor Emirates NBD, and would reduce total non-performing loans by 2.7 percentage points.
Dubai World’s new deal will involve the early repayment of about $2.9bn of debt due by September this year, and an extension of the repayment date for a further $10bn, originally due in 2018, by an extra four years. About $1.8bn has already been repaid to creditors from the proceeds of asset sales.
The buy-in from Dubai World’s remaining holdout creditors came shortly after the conglomerate announced last month that it had already acquired approval from 73.01 per cent of creditors holding 66.92 per cent of its debt.
Dubai World said that any remaining creditors signing up to the deal before February 8 would receive an incentive fee for doing so.
Under the terms of Decree 57, which established the Dubai World Tribunal in 2009, just 66.67 per cent of creditors by value are required to approve voluntary arrangements for them to come into force.
Holdout creditors were subsequently left with little choice but to sign up to the deal to gain incentive fees, a second lawyer said.
Sir Anthony Evans, the presiding judge yesterday, offered the tribunal’s congratulations “to those advising and acting for Dubai World in achieving this highly successful outcome to the processes and preparation and negotiation which have occupied them for very many months”.
He went on to express his hope that “the machinery provided by Decree 57, and the existence of the tribunal established by it, have contributed to that success and have proved useful to an important part of the business and economy of Dubai”.
jeverington@thenational.ae
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