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Thu 5 May 2011 08:38 AM

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Dubai World 'can’t afford to default', says Sheikh Ahmed

State-backed firm in no rush to sell assets at fire-sale prices to meet debts, says chairman

Dubai World 'can’t afford to default', says Sheikh Ahmed
Sheikh Ahmed, who also runs state-owned Emirates airline, has spearheaded Dubais efforts to dig out from its debt crisis

State-owned conglomerate Dubai World can’t afford to default on its restructured $24.9bn in debt and is able to meet its credit obligations, the company’s chairman said Wednesday.

“Whatever [commitment] we have at the end of the day, we are committed to do it, and we will do it,” Sheikh Ahmed Bin Saeed Al Maktoum told newswire Zawya Dow Jones.

“I don't think we can afford today, if we have anything, to default on it. It is a matter of credibility and I’m sure we will be able to demonstrate this in the coming years.”

Dubai World, which includes DP World, Nakheel and Drydocks World among its units, last month signed a final agreement with its 80 creditors to restructure almost $25bn in debt.

Under the terms of the two-tranche debt plan, creditors will receive $4.4bn in five years while the second tranche will involve $10.3bn over eight years at a fixed interest rate of 2.4 percent.

Dubai World said in July it was prepared to sell prized assets including previously ringfenced ports firm DP World in a bid to raise cash, but Sheikh Ahmed said there was no rush to market.

"When they tell me you have to sell this and you have to sell that, I don't have to sell it today,” he said. “If there is something I have and I want to sell in two to eight years, I will try to clean up the business, to make those companies look good, perform good and that is one way of getting much better price for it.”

Sheikh Ahmed, who also runs state-owned Emirates airline, has spearheaded Dubai's efforts to dig out from a crisis which erupted in 2009 after Dubai World said it would seek a debt standstill.

The glitzy Gulf Arab emirate needed a last-minute $10bn bailout from neighbour Abu Dhabi and has been busy restructuring key state-linked firms' debts.

Last month, Sheikh Ahmed told a meeting of about 600 managers from Dubai World’s business units that the company was moving into a new stage.

“What’s past is past,” he said. “Dubai World has now moved into a new phase of growth. We look forward to a brighter future based on solid financials.”

Sheikh Ahmed replaced Sultan Ahmed bin Sulayem as Dubai World chairman in December.

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