Royal Bank of Scotland (RBS) is resisting plans by Dubai World to restructure its debt, it was reported on Tuesday.
Sky News reported that RBS raised concerns at a meeting of Dubai World's creditors in London last week, saying that it is unhappy with a plan to extend a $10.5 billion loan due for repayment in 2018 by a further four years.
The entity has been in talks with some of its lenders to extend the maturity of the largest single repayment under a $25 billion debt restructuring agreement struck in 2011, with a series of incentives offered in exchange.
The plan requires the approval of 67 percent of the creditors to use a local law called Decree 57, which was brought in to help facilitate the original restructuring.
Dubai World is keen to take advantage of an improving economy to secure more favourable terms for its borrowings.
Sky News said RBS does not hold enough of Dubai World's debt to block the restructuring by itself, and cited insiders as suggesting that there was sufficient support for the proposals to ensure that they would be implemented.
The loans comprise a $4.4 billion term loan that is scheduled to mature in May 2015, and a $10.3 billion term loan that matures in 2018. The plan proposes to increase the interest margin on the larger loan to 425 basis points (bps) over Libor from 300 bps, with the maturity extended to 2022, sources told Reuters.
The plan also proposes to repay in full the $4.4 billion loan. The repayment will be partially funded by the $2.6 billion sale of Dubai World's EZW logistics infrastructure firm to DP World which was agreed last month.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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