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Fri 5 Feb 2010 02:02 PM

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Dubai says aid to Dubai World on commercial terms

Dubai Financial Support Fund has given Dubai World about $6.2bn over last year.

Dubai said on Friday that aid given to Dubai World  was on commercial terms, after a report that collateral for further aid was delaying a deal to address the conglomerate's unmanageable debt burden.

The Dubai Financial Support Fund (DFSF) has given the company, which is trying to reach a standstill agreement with creditors on delaying $22 billion in debt, about $6.2bn over the past 12 months and stands ready to provide "considerably more", a spokeswoman said.

"This money was made available to the DFSF on commercially reasonable terms, and the DFSF has endeavoured to advance these funds to the company on a commercial basis," the spokeswoman, who spoke on customary anonymity said.

The government declined comment on a UAE newspaper report on Friday that a DFSF plan to take Dubai World security against future aid was delaying agreement on a standstill, because such a plan would make the DFSF a preferred creditor in the event of an insolvency.

Citing unnamed sources, The National newspaper said the plan was a "central sticking point in negotiations".

Dubai World rocked global markets on Nov. 25 with plans to request a delay on repaying $26 billion in debt linked to its main property units Nakheel and Limitless World.

It staved off default on a $4.1 billion Islamic bond linked to Nakheel after a last-minute bailout from Abu Dhabi.

The company has been negotiating with an unofficial seven-member bank coordinating committee but has yet to present a formal proposal on plans to repay the debt.

Dubai launched a $20 billion sovereign bond programme in February 2009, with the first $10 billion tranche taken by the central bank. It raised a further $10 billion in November and December from two Abu Dhabi-linked banks and the emirate of Abu Dhabi.

The DFSF, set up to disperse proceeds from the programme to state-linked firms in need of help, is accountable to a five-man Supreme Fiscal Committee which has overall responsibility for overseeing Dubai's fiscal policies.

Dubai World has access to a remaining $4.9 billion of the funds provided by Abu Dhabi - $5 billion in a Dec. 14 bond, and $5 billion lent by the Abu-Dhabi-linked banks. The financial support, aside from paying Nakheel's bond, will cover working capital and interest expenses. (Reuters)