Dubai creditors all on board

Dubai World has signed up the final member of its creditor list to the US$25 billion debt restructuring package after less than a year of negotiation.

Nakheel, the property subsidiary of Dubai World, developed Palm Jumeirah.
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Dubai World has signed up the final member of its creditor list to the US$24.9 billion (Dh91.45bn) debt restructuring package after less than a year of negotiation.

Aurelius Capital Management, a US investor in distressed funds, was the only one of more than 90 creditors not to have accepted the terms ahead of a deadline last month.

But Aurelius has now sold its $5 million of debt to Deutsche Bank, according to informed sources. Deutsche Bank declined to comment.

"I cannot comment on the detail but can confirm we now have 100 per cent acceptance of the terms, which is obviously better than the 99.96 per cent we had previously," said a spokesman for Dubai World.

Aurelius is believed to have bought its $5m chunk of Dubai World debt in June at about 55 per cent of value. Although the purchase price paid by Deutsche has not been disclosed, it is believed Aurelius made a profit on the deal.

Signing up Aurelius means Dubai World will not have to resort to the special tribunal set up to arbitrate claims against the company by creditors, a costly and time-consuming process that could have delayed a final settlement.

But the tribunal is still hearing cases from customers and contractors to Dubai World and its property subsidiary, Nakheel. The new conditions extend repayment terms for between five and eight years at lower interest rates.

Simultaneously, Dubai World is likely to undertake a schedule of asset disposals, with as much as $19bn worth of assets possibly for sale.

The Aurelius deal marks the final phase of the complex negotiations over the restructuring, which was announced last November.

Aidan Birkett, a former partner at the international accounting company Deloitte who presided over the talks with creditors as Dubai World's chief restructuring officer, left the company this month with his job done.

Some work remains to sign off on the restructuring. Full documentation is being presented to creditors for final approval, which is a time-consuming process.

A source close to Dubai World said the procedure could be completed by November 25, the anniversary of the announcement of the restructuring, although this was not regarded as a formal deadline.

Restructuring experts regard the comparatively speedy resolution to Dubai World's problems as an achievement for the company and its advisers.

"The fact that Dubai World was so crucial to the Dubai economy, and that the Government was the sole shareholder, probably helped focus minds," said one.

Other high-profile restructurings in the region, such as those of The Investment Dar and Global Investment House in Kuwait, have taken longer, despite the debts being smaller and creditors fewer in each case.