Dubai Group Said to Propose Paying Debt Over 5 to 10 Years - Businessweek
By Arif Sharif
(Adds Dubai World in ninth paragraph)
Feb. 6 (Bloomberg) -- Dubai Group LLC, an investment company owned by the emirate’s ruler, offered to pay creditors over five to 10 years as it seeks to restructure $6 billion of bank debt, a banker familiar with the proposal said.
Secured lenders, who are owed $3.2 billion and whose loans are backed by assets, have been offered payment of principal in five years, said the person, declining to be identified because the negotiations are private. Partially secured and unsecured lenders, who are owed the remaining $2.8 billion, will be paid over eight and 10 years, the banker said.
Dubai Group, controlled by Dubai Holding LLC, is one of several companies in the emirate seeking to restructure loans after property prices and asset values slumped and credit markets froze. Dubai World, one of the sheikhdom’s three main state-controlled holding companies, reached a deal in March with about 80 banks to delay payments on $25 billion of debt.
Dubai Group is “not prepared to discuss the various aspects of private negotiations,” the company said in an e- mailed response to questions. “Dubai Group is still in discussions with lenders and is fully committed to reaching a consensual agreement that is reasonable for all stakeholders.”
Assets backing the secured loans are more than sufficient to pay those creditors now, although they are prepared to wait to allow values to appreciate, the banker said. The proposal plans for interest payments, though at this point no cash support from the Dubai government is expected, the banker said.
Restructuring Help
Dubai Group appointed eight banks to represent creditors in two committees in 2011 to help with the restructuring. Paris- based Natixis SA’s Nexgen unit and Dubai-based Mashreqbank PSC make up the committee of secured lenders. Royal Bank of Scotland Group Plc and Emirates NBD PJSC lead the group of partially secured and unsecured lenders.
Victoria Eideliman, a Paris-based spokeswoman for Natixis, and a spokeswoman for Royal Bank of Scotland in Dubai declined to comment. A spokeswoman for Mashreqbank said she couldn’t immediately comment, while the spokesman for Emirates NBD couldn’t be reached. They declined to be identified citing their companies’ respective policies.
Dubai World
Dubai Group, which owes another $4 billion, invests in financial services and owns property in the U.S., according to its website. It holds stakes in companies including Dubai-based investment bank Shuaa Capital PSC, Cairo-based investment bank EFG-Hermes Holding SAE and BankMuscat SAOG in Oman.
Dubai World reached an agreement with about 80 creditors in March on its debt restructuring. Of its $25 billion of loans, Dubai World owed $14.7 billion to financial institutions and about $10 billion to the Dubai government. It plans to return $4.4 billion to bank creditors in five years and $10.3 billion in eight years. It will pay an average fixed interest rate of 2.4 percent on the loans, the company said in March.
Dubai will back “any strategic investment we have,” Mohammed Al Shaibani, director general of Dubai ruler’s court said Sept. 23. Dubai has an “interest to back up the government entities and the government-related enterprises -- anything that’s sizable with a major benefit to the economy.”
--With assistance from Stefania Bianchi and Dana El Baltaji in Dubai. Editors: Claudia Maedler, Inal Ersan
To contact the reporter on this story: Arif Sharif in Dubai at This e-mail address is being protected from spambots. You need JavaScript enabled to view it
To contact the editor responsible for this story: Claudia Maedler at This e-mail address is being protected from spambots. You need JavaScript enabled to view it