Dubai World, the troubled state-owned company of the emirate of Dubai, announced on Tuesday that it is engaged in “constructive” talks with banks to restructure approximately $26 billion in debt.
"The total value of the debt of companies in the restructuring process amounts to about $26 billion", stated Dubai World in a press release. Of this, $6 billion is attributed to Islamic bonds held by its subsidiary Nakheel, Dubai World further reported. The restructuring will involve the subsidiaries Nakheel World and Limitless World, but will not include the subsidiaries Infinity World Holding, Istithmar World, and Ports and Free Zone World. Nakheel requested a trading suspension of its bonds on the Dubai stock exchange on Monday. This company, part of Dubai World’s operations that deals with construction projects, has $3.5 billion in Islamic sukuk bonds maturing in December. Dubai World has also committed to greater transparency.
"Dubai World intends to adopt a policy of regular communication with the public and will regularly report on the progress of the restructuring," the statement said. Insufficient transparency has further alarmed investors, shaken after last week’s announcement that the company would seek a six-month moratorium on the repayment of financial obligations amounting to $59 billion. Officials from the government of the emirate of Dubai have clearly stated that the state is not prepared to guarantee the debts of this troubled giant. Analysts, however, warn that while the company is under pressure, it possesses valuable assets that could provide it with a little more breathing room while it reprograms its obligations. (H)
