Dubai World’s creditors will respond to a proposal to restructure $24.8bn in debt within weeks, said the chief executive officer of Abu Dhabi Commercial Bank, one of the state-owned company’s biggest lenders.
“We owe it to Dubai World to get back to them officially,” Ala’a Eraiqat told reporters today in Abu Dhabi. “There is a set deadline in weeks.”
Dubai World, one of the emirate’s three main state-owned holding companies, and its property unit, Nakheel, are seeking to renegotiate their borrowings after the global credit crisis battered Dubai’s real estate market and left the emirate’s companies unable to raise new debt.
Dubai World asked its nearly 100 creditors on March 25 to roll over debt into two new loans of five-year and eight-year maturities. The government has pledged $9.5bn in cash to help the restructuring.
Dubai World’s creditors include Royal Bank of Scotland Group, HSBC Holdings, Lloyds Banking Group, Standard Chartered, Bank of Tokyo-Mitsubishi and Emirates NBD. HSBC’s head of investment banking, Stuart Gulliver, said on March 30 he is “comfortable” with the plan, and RBS Chief Executive Officer Stephen Hester said the following day that the proposal is “positive.”
Dubai on Sunday created a team, led by Jamal Hamed al- Marri, director of central accounts at the Department of Finance, to draw up a plan to increase revenue and cut spending. Dubai last month asked government departments to reduce spending this year to decrease the size of a planned AED6bn ($1.6bn) deficit. Departments were told to slow spending by 15 percent to save about $1bn.
Eraiqat said Abu Dhabi Commercial, the third-largest bank in the UAE, is assessing the implications of the Dubai World debt on its financial performance. “Every restructuring will have certain implications for provisioning, and we are assessing that,” he said.
Abu Dhabi Commercial has about $2.7bn in outstanding loans to Dubai World entities, including those that aren’t affected by the company’s restructuring, Eraiqat said in an interview on January 31. The bank’s fourth-quarter loss widened to AED1.2bn from AED262m a year earlier after it more than doubled provisions for bad loans.
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