State-owned Dubai World has offered to pay its bank creditors 30 percent of its debt over five years and the remainder in eight years, a report said on Wednesday, but local lenders are resisting pressure to agree.
Dubai World is in talks with a core panel of seven banks on a debt plan that proposes full repayment in two tranches over five and eight years at 1 percent interest and 1 percent payment-in-kind at the end of the loan.
Arabic language daily al Khaleej cited an unnamed government official as saying that Dubai World was offering to repay the banks 30 percent of its debts in the first tranche and 70 in the second. Dubai World declined to comment. However, the two sides are still struggling to reach an agreement. The banks are not happy with the terms, particularly the offer on interest payments, and are concerned about the future status of the loans on their balance sheets.
"The local banks are still holding out for a better deal," said a Gulf-based banker, declining to be identified. "Their cost of funding is much higher than the international banks, and banks like Abu Dhabi Commercial Bank they don't want to accept 2 percent." The chairman of Dubai's Supreme Fiscal Committee had at beginning of month a deal could be finalised within two weeks.
Dubai World's property unit Nakheel repaid a $980 million Islamic bond, or sukuk, in full and on time last week. Dubai shocked global markets last year when it unveiled plans to delay repaying $26 billion in debt as it restructured Dubai World. It unveiled a $9.5 billion rescue plan for the firm and property unit Nakheel in March.
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