Saturday, March 14, 2009

Funds on way to help Dubai companies; property firms on priority list

The companies in Dubai can expect funds within two weeks time, out of the US$10bn (Dh.36.73bn) which the Dubai Government borrowed from the Central Bank, to help ease the cash squeeze situation in the emirate.

This was revealed by Nasser al Shaikh, the Head of Dubai Finance Department, when speaking during a conference today. The funds, which form a part of the $20bn bond programme introduced last month to help Dubai in meeting the short-term requirements for funding, helped calm down investors, who were worried that the companies may face hurdles repaying debts this year, as the banks were reluctant to refinance loans due to the global credit crunch.

The emirate is yet to decide on how to administer the funds on a case-by-case basis, although Al Shaikh confirmed that the property sector companies would be given special priority. The Economist at Standard Chartered, Shady Shaher, said that although firms outside property sector too, would be eligible for funds, he expects majority of the money to flow into property companies, particularly, those that are partially-owned by Dubai Government.

Several large Dubai-based groups have already applied for funds. Al Shaikh said that the cash flow to the companies, affected by global crunch, would be given based on their requirements.
The Dubai Government is believed to set up a special fund through the Department of Economic Development, to lend a portion of the $10bn to small and medium-sized companies that require cash.

Speaking about the real estate market in Dubai, Al Shaikh said that the finance department would keep bringing out measures to stimulate the sector. The focus in the present situation should be on settling the disputes between buyers and sellers, he pointed out.

As for the current talks between Tamweel and Amlak, the two largest mortgage companies of UAE, Al Shaikh, who is also the Chairman of Amlak, said that the management of both companies were holding discussions about the same with the Ministerial Committee. Although it was thought that the companies were planning a merger, the statement from government officials earlier this week, ruled out the possibility and suggested other options.

However, al Shaikh said that more companies are also planning consolidation, amidst slowdown, although a potential consolidation should make sense to shareholders and to the economy at large.

Al Shaikh also did not deny the likelihood for consolidation between companies in Dubai and Abu Dhabi, either.

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