Full repayment is option for Dubai

Dubai could fully repay all of the bank debt owed by the property and ports conglomerate Dubai World, financial leaders in London were told during the recent visit by two of the emirate’s top officials. People present at talks between UK and Dubai leaders said the possibility of repaying all bank loans in full was discussed as a medium-term possibility during talks involving Sheikh Ahmed bin Saeed Al Maktoum and Mohammed al Shaibani of the Dubai Supreme Fiscal Committee.

“They made clear there were a number of options the Government of Dubai saw as feasible and desirable for Dubai World and repayment in full was one of them,” said a person at the talks who declined to be identified because the meetings were private.

The total debts of those parts of Dubai World earmarked for restructuring, mainly the property groups Nakheel and Limitless, amount to some US$22 billion (Dh80.76bn) after repayment of $4bn for Nakheel’s sukuk. The total includes bilateral and syndicated bank debt as well as unpaid bills to contractors. Though no breakdown has been given by Dubai World, analysts have estimated bank loans account for more than half the amount. British banks form the biggest single group by country of origin with exposure believed to be more than $5bn.

The banks are due to meet Dubai World tomorrow in the first formal session of talks aimed at resolving the company’s debt position. “All options remain open and we believe a consensual process with the creditor banks remains the best way forward,” a Dubai World spokesman said.

Sheikh Ahmed and Mr al Shaibani were accompanied at the London talks by Augusto Sasso, an executive of the US restructuring firm Moelis and Co, which has been hired to advise the Dubai Government. Full repayment would be the preferred option for the creditors, represented by the British banks RBS, Standard Chartered, Lloyds and HSBC, with the regional banks Abu Dhabi Commercial Bank and Emirates NBD representing the Gulf.

Despite the funds from the recent $10bn bond issue backed by the UAE Central Bank, Dubai is not thought to be in a position to repay in full immediately.

– The National