Dubai World creditors proposal

Dubai World

Within the next few weeks, Dubai World's creditors will respond to a proposal to restructure US$24.8 billion in debt, said the chief executive officer of Abu Dhabi Commercial Bank, one of the state-owned company's biggest lenders.

"We owe it to Dubai World to get back to them officially," Ala'a Eraiqat told reporters today in Abu Dhabi. "There is a set deadline in weeks."

Dubai World, one of the emirate's three main state-owned holding companies, and its property unit, Nakheel, are seeking to renegotiate their borrowings after the global credit crisis battered Dubai's real estate market and left the emirate's companies unable to raise new debt.

Dubai World asked its nearly 100 creditors on 25 March to roll over debt into two new loans of five-year and eight-year maturities. The government has pledged US$9.5 billion in cash to help the restructuring.

Dubai World's creditors include Royal Bank of Scotland Group, HSBC Holdings, Lloyds Banking Group, Standard Chartered, Bank of Tokyo-Mitsubishi and Emirates NBD. HSBC's head of investment banking, Stuart Gulliver, said on 30 March he is "comfortable" with the plan, and RBS Chief Executive Officer Stephen Hester said the following day that the proposal is "positive," Arabian Business report.

Dubai action plan

Sunday saw Dubai creating a team, led by Jamal Hamed al- Marri, director of central accounts at the Department of Finance, to draw up a plan to increase revenue and cut spending. Last month, Dubai asked government departments to reduce spending this year to decrease the size of a planned US$1.6 billion deficit. Departments were told to slow spending by 15 percent to save about US$1 billion.

Eraiqat said Abu Dhabi Commercial, the third-largest bank in the UAE, is assessing the implications of the Dubai World debt on its financial performance. "Every restructuring will have certain implications for provisioning, and we are assessing that," he said.

Abu Dhabi Commercial has around US$2.7 billion in outstanding loans to Dubai World entities, including those that aren't affected by the company's restructuring, BusinessWeek reports.

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