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Tue 29 Sep 2009 09:54 AM

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US turnaround firm to help crisis hit Dubai firms

Firm overseeing Lehman Brothers bankruptcy in talks with Dubai companies.

Alvarez & Marsal, the US turnaround firm overseeing the Lehman Brothers bankruptcy, is in talks to help restructure firms humbled by the global financial crisis in Dubai, the Gulf's trade and tourism hub, a top executive said on Monday.

Managing director Antonio Alvarez declined to identify the companies his firm was dealing with.

"The types of mandates we are seeking and discussing are the (likes) of Dubai World," he said on the sidelines of a restructuring and refinance conference in Dubai.

Dubai World, a vast government holding company with $59bn in liabilities, hired AlixPartners -- the same firm advising on General Motors bankruptcy -- in June to help restructure the group.

Alvarez said the firm, which earlier this month signed on to advise clothing and accessories maker Liz Claiborne Inc, had been awarded "three mandates in (Middle East) region and we are negotiating some restructuring deals".

Dubai has taken a hit in the wake of the global financial crisis and a severe property downturn. A debt implosion at a pair of Saudi firms has added to corporate woes and rising debt levels have boosted the risk of defaults.

"Non-performing debt is a big issue in the region, involving investment funds, investment banks, hospitality and real estate," Alvarez said.

Dubai's government and companies linked to it have refinanced about $9 billion of debt this year and have two major Islamic bonds maturing in the fourth quarter -- developer Nakheel's $3.52 billion sukuk on December 14 and a $1 billion Dubai Global sukuk on November 4.

Last week, Fitch Ratings said the rise in debt, as well as diminished financial resources, will make it harder for authorities in the UAE to provide support for UAE banks.

The UAE government and central bank have already taken a number of steps to help the country's banks weather the financial crisis, including pouring $6.8bn into bank deposits last October. (Reuters)

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