Dubai's debt-laden company Dubai World said after meeting creditors on July 22 that it will complete restructuring its remaining debts "over the coming months."
The company said it met with creditor banks "to present formally the proposed restructuring plan for Dubai World, which has been agreed between the company and its co-ordinating committee of creditor banks (CoCom) with the support of the government of Dubai."
It described meeting as an "informational session" that gives creditors "the opportunity to review the information provided before responding to the proposal." On July 11, an official told AFP that CoCom, which includes seven banks representing 60 percent of the group's debts, "has already approved the deal and agreed terms with the company." The embattled group, whose default fears had rocked global markets, said on May 20 that it had reached agreement "in principle" with most of its bank lenders to restructure some 23.5 billion dollars (18.2 billion euros) in debt.
Under that agreement, the company will divide 14.4 billion dollars of debt into two tranches, maturing in five and eight years respectively, while the government will convert 8.9 billion dollars of aid to the company into equity.
The first tranche, of 4.4 billion dollars, will bear 1.0 percent interest with no government shortfall guarantees. The second will be worth 10 billion dollars, also bearing also 1.0 percent interest, plus varying options of payment in kind and shortfall guarantees. Other creditors, who hold the remaining 40 percent of the company's debt, have not agreed to any deal so far.
Dubai World's major lenders include four British banks - HSBC, Lloyds, RBS, and Standard Chartered. Other banks include the Bank of Tokyo, Abu Dhabi Commercial Bank and Dubai's Emirates NBD bank.
Dubai rocked global financial markets in late November when it said it might need to freeze debt payments by its largest conglomerate, stoking fears of a state default over sovereign debt.
In order to buoy its troubled firms, since last February the emirate has issued 20 billion dollars in bonds, which have been fully subscribed. The Abu Dhabi-based central bank subscribed to 10 billion dollars, while the government of Abu Dhabi and two Abu Dhabi-backed banks subscribed to five billion each.
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