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Banks agree to restructure Dubai World mega-debt

Text by News Wires

Latest update : 2010-05-20

Dubai World, whose debt rocked markets back in November, has announced it has reached an agreement with most its bank lenders in order to restructure some 23.5 billion dollars.

AFP - Dubai's debt-laden group, Dubai World, said Thursday it has reached an agreement "in principle" with most of its bank lenders to restructure some 23.5 billion dollars in debt.

"Dubai World is pleased to announce that headline economic terms have been agreed in principle with the Coordinating Committee" representing 60 percent of the group's bank lenders, it said in a statement.

According to the agreement, the company will divide 14.4 billion dollars of debt into two tranches, maturing in five and eight years respectively, while the government will convert 8.9 billion dollars of aid to the company into equity.

The first tranche of debt will be valued at 4.4 billion dollars, while the second will be worth 10 billion dollars, it said.

"We are pleased that we have received unanimous support in principle of the CoCom on the headline economic terms to our restructuring proposal," said Chief Restructuring Officer of Dubai World, Aidan Birkett.

"This is an important milestone and reflects out efforts to achieve the best possible solution for all stakeholders," he added.

The company said, however, that the proposal requires the agreement of the remainder of Dubai World's financial creditors.

The government of Dubai and Dubai World had tabled this offer to bank lenders in March after three months of negotiations.

Dubai rocked global financial markets in late November when it said it might need to freeze debt payments by its largest conglomerate Dubai World, stoking fears of a state default over sovereign debt.

But it has issued bonds worth 20 billion dollars since February last year to buoy its troubled firms, which has been fully subscribed by neighbouring Abu Dhabi and the UAE central bank.

The Abu Dhabi-based central bank subscribed with 10 billion dollars, while the government of Abu Dhabi and two Abu Dhabi-backed banks subscribed to five billion dollars each.

Date created : 2010-05-20

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