Published May 08, 2013
DUBAI – Dubai Group, an investment vehicle owned by the emirate's ruler, aims to secure a final agreement with creditors on its $10 billion debt restructuring by June 6, potentially ending marathon negotiations that have dragged on nearly three years.
Dubai Group, a unit of Dubai Holding, the investment arm of Sheikh Mohammed bin Rashid al-Maktoum, was hit hard by the global financial crisis in 2008 as asset values tumbled, exposing its use of leverage.
Since it missed interest payments on two loan facilities in 2010, it has been locked in talks with its lenders to extend repayment deadlines. Of Dubai Group's $10 billion total debt, $6 billion is owed to banks and the remaining $4 billion is classed as inter-company loans.
Final restructuring documents were sent to unsecured creditors on Wednesday and a meeting with bankers is scheduled to take place in Dubai on May 15, two sources familiar with the negotiations said, speaking on condition of anonymity as the information isn't public.
Other creditor classes have already agreed on the restructuring; unanimous approval from unsecured creditors is needed to allow the deal to be completed.
Dubai Group wasn't immediately available for comment.
Under the terms of Dubai Group's restructuring, creditors are being asked to extend their obligations for between 3.5 and 12 years, depending on the assets secured against their exposure, to allow Dubai Group's assets to recover in value before divestment.
For unsecured creditors, who have been offered a 12-year extension, there is an option to be repaid after five years, albeit at a discount.
In January, Dubai Group settled with banks which brought legal action to secure repayment of their share of the debt, a move which paved the way for a deal to be offered to unsecured creditors.
(Writing by Dinesh Nair; Editing by Andrew Torchia)