Dubai World will repay interest on loans to creditors and then the loans themselves in instalments, a government official was quoted as saying, after the state owned conglomerate reached a formal deal to restructure almost $25 billion of debt.
The restructuring agreement with over 99 percent of creditor banks will rebuild confidence in Dubai's economy and marks a new start for the debt struck emirate, Ahmad Humaid al Tayer, a key player in Dubai's government and corporate landscape, told the Arabic daily al-Bayan in an interview published on Saturday.
Speaking to the paper, Tayer said: "The repayment process will begin with the payment of interest rates, and then loan instalments, which will also depend on the nature of each loan as some of the loans are consolidated credits, while some are bilateral and some are bonds."
Tayer is also a member of Dubai's fiscal committee and chairman of Dubai's largest bank, Emirates NBD.
While Dubai World's agreement is seen as a positive step towards resolving the debt crisis, the announcement came just days after a unit of Dubai Holding, the conglomerate owned by Dubai's ruler, said it would delay repayment on a $555 million loan, the second time it has failed to meet a repayment deadline.
Approval of the debt restructuring deal would also pave the way for fresh investment opportunities in Dubai, especially in infrastructure and construction, trade, transport, tourism and the financial sector, Tayer told the paper.
He said: "All these elements will help Dubai to rebuild its position as a regional trade and services centre in the Middle East."
However, other related entities such as property group Limitless yet have to reach a debt restructuring resolution.
Limitless has asked its lenders to roll over a $1.2 billion Islamic loan for six months from the end of September, following an initial extension earlier this year.
Tayer said the Dubai World agreement with creditors took several months given the size of the restructuring and in order to reach the best solution for all parties involved, and the fact that it was the first time a restructuring was carried out by a financial entity like Dubai World. (Reuters)