Dubai confirms final debt deal
Dubai, January 24, 2014
Financial services conglomerate Dubai Group has reached a final deal with creditors on restructuring $10 billion of debt, resolving the last major hangover from the emirate's financial crisis, its parent company confirmed.
Lenders agreed to restructure about $6 billion of bank facilities while a further $4 billion of debt will be repaid after bank creditors are satisfied, Dubai Holding, the investment vehicle of Dubai's ruler, said in a statement.
The statement confirmed a January 16 Reuters report, which quoted banking sources as saying the deal had been done.
Lenders to Dubai Group agreed to extend maturity dates to the end of 2016 for secured facilities and to the end of 2024 for partially secured and unsecured facilities. This is intended to buy time for Dubai Group's assets to recover in value so that some can be sold to meet its obligations.
Dubai Group was one of a number of Dubai state-linked entities which borrowed heavily from banks to fund an acquisitions spree during the boom years of 2006-8.
But as credit markets dried up following the global financial crisis and a crash of Dubai's real estate market, they found themselves unable to manage their obligations and were forced to renegotiate tens of billions of dollars of debt.
Dubai Group's deal concluded more than three years of negotiations over its debt pile. Its lenders include big Western banks such as France's Natixis and top Gulf institutions such as Dubai's Emirates NBD.
A number of creditors sought a remedy through the courts - a rare occurrence in the Gulf - which resulted in some, including Royal Bank of Scotland and Commerzbank, accepting 18.5 cents on the dollar to exit the restructuring process. - Reuters