Tuesday, March 30, 2010

Dubai Government to inject $9.5bn into Dubai World Group

The Dubai Government has committed itself towards injecting $9.5bn into the Dubai World group, to help pay off $14.2bn worth debt to creditor banks.

If the debt-restructuring proposal by the Dubai World is accepted by its creditors, it would serve as a welcome boost to Dubai real estate sector.

The Chairman of Dubai Supreme Fiscal Committee, Shaikh Ahmad Bin Saeed Al Maktoum, said that the Dubai Government is taking decisive action to meet the challenges pertaining to global economic crisis and to build a foundation for strong and balanced growth in future.

The Dubai World has put forth proposals yesterday offering full loan re-payment to creditors in a period of five to eight years, and 100 percent repayment of real estate developer Nakheel's 2010 and 2011 bonds.

The support comes largely from the $10bn offered by the Abu Dhabi Government last year, and by the internal resources by Dubai Government, said a Government Statement.

Nakheel will be re-capitalized by $8bn, with $1.2bn debt-forequity swap, which also forms part of the initiative to take the property developer off the hands of Dubai World, and place it directly with the government.

It will also pump $1.5bn into Dubai World, as part of re-capitalization, which would include $8.9bn debt-for-equity swap.

The government injection is subject to the proposed plan being approved by 97 creditor banks. Discussions are likely to take weeks, as Dubai World secures the deal.

Speaking on the proposal, the chief re-structuring officer of Dubai World, Aidan Birkett, agreed that the plan will offer Nakheel a stable financial footing, enabling it to meet outstanding obligations to customers and continue its role in the ongoing development of UAE real estate market.

The market yesterday welcomed the announcements with the Dubai Financial Market increasing 4.31percent, the highest in recent weeks.

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