Dubai Holding said to have $12bn debt, seeking roll over

Dubai Holding, a company owned by Dubai ruler Sheikh Mohammed Bin Rashid Al Maktoum, and its units owe banks $12 billion and have begun talks to roll over some of the loans, a person with knowledge of the matter said. Almost three fourths of the loans have been racked up by Dubai Holding’s two investment companies, Dubai Group and Dubai International Capital, said the person, declining to be identified because the information is private.

Dubai International is talking to banks to refinance a $1.25 billion loan maturing in June while another unit, Dubai Holding Commercial Operations Group, asked lenders to roll over a $555 million credit facility due in July, the person said.

In an emailed statement, Dubai International said: “We are confident of our ability to refinance the $1.25 billion loan, and we continue to service our debt obligations as usual,”

A spokesman for Dubai Holding declined to comment.

The companies have hired consultants to validate their business plans, which will provide greater comfort to lenders of their viability, said the person.

Dubai International engaged Deloitte, while Dubai Group hired KPMG, said the person. The Financial Times reported the story earlier today.

Dubai, the second biggest of seven states that make up the UAE, and its state owned companies have debt of $109.3 billion, according to International Monetary Fund estimates.

Dubai World, one the emirate’s three main state owned holding companies, and its real estate unit, Nakheel, are in talks with banks to restructure $24.8 billion of debt.

Dubai Group and Dubai International Capital, which are both private equity investors and own stakes in companies including Bank Islam Malaysia Bhd, Airbus parent European Aeronautic, Defence and Space Co and Sony Corp, are exploring refinancing options, including extending loan maturities, the person said.

Both companies continue to pay interest on all outstanding loans, the person said.

Dubai’s government said on March 25 that “it can’t rule out future issues” relating to Dubai Holding’s debt.

“No government can predict the future,” it said that day, while pledging $9.5 billion in cash to support Dubai World’s restructuring.