The Dubai government has announced
it will provide $9.5 billion in funding to help its Dubai World investment
vehicle to restructure its debt.
The troubled company has presented
a plan to restructure $23.5 billion of debt to its creditors, including
converting $8.9 billion of government debt into equity.
Creditors will now decide on
whether to accept the plan.
The restructuring plan also
involves a cash injection of $1.5 billion from the Dubai Financial Support Fund
as well as issuing two tranches of new debt to be repaid over five- and
Dubai World said it owed $14.2 billion
to creditors outside the support fund, and these would “receive 100 per
cent principal repayment” through the new debt issues.
“This proposal represents the
best possible solution for all stakeholders,” Dubai World said.
“It follows extensive discussions
with our creditors, a thorough review of Dubai World’s businesses and
significant financial support from the government.”
Sheikh Ahmad bin Saeed al-Maktoum,
chairman of the Dubai Supreme Fiscal Committee, said the proposals would ensure
that both Dubai World and property company Nakheel were “key contributors
to the strong economic future of the Emirate of Dubai”.
“The government of Dubai,
acting through the support fund, will support these proposals with significant
financial resources, including a commitment to fund up to $9.5 billion in new
funding over the business plan period.”
Analysts said the proposals would
be well received by investors.
“It boosts sentiment because
this is a strong commitment,” said Ayman al-Saheb at Darahem Financial
He said the companies could now
begin “restructuring properly”.