Dubai World is prepared to sell prized assets including previously ringfenced ports firm DP World in a bid to raise as much as $19.4 billion to repay creditors, a document obtained by Reuters showed.
-- Aims to raise up to $19.4bn to pay off debts
-- Company to appoint new MD, CFO
The document, presented on July 22 to creditors at Dubai's lavish Atlantis Hotel, also revealed that the state-owned conglomerate's debt stood at $39.9 billion, higher than the widely expected mid-$20 billion range.
Dubai World, battling to win creditor support for a restructuring by October 1 in order to start cleaning up its balance sheet, warned a sale of assets right now would generate a maximum of $10.4 billion, according to the document, which was obtained on Wednesday.
Rami Sidani, head of investment at Schroders Middle East, said the level of debt was "much larger" than anticipated and was surprised key assets were now potentially on the block. The midpoint of the range that Dubai World expects to raise from selling assets is $17.6 billion, the document showed.
Among the prized assets also slated for sale are stakes in luxury retailer Barney's, the Atlantis Hotel and casino operator MGM Resorts International, within the plan to raise up to $7.6 billion in five years. The conglomerate also identified Jebel Ali Free Zone and Dubai Maritime City (DMC) and Dry Docks World among "strategic assets" that may yield up to $11.8 billion within eight years.
In a sign of the deep overhaul that Dubai World has committed to, the company will appoint a new managing director and chief financial officer. But Aidan Birkett, the officer in charge of its restructuring will remain in place until December. The document also showed Dubai developer Nakheel has $10.9 billion of bank debt and will receive key assets from parent company Dubai World after separation.
A deal has already been agreed with core lenders representing 60 percent of the loans, but Dubai World needs two-thirds acceptance to be able to take the deal to the tribunal in the event of a rebellion. As a further incentive to creditors burnt by the group's ambitious expansion in boom times, Dubai World is offering bankers a "consent fee" of between $150,000 and $800,000 for agreeing to the proposed plan, the document showed.
The restructuring plans involves repayment over five to eight years, with interest of between 1 percent to 3.5 percent. Dubai World's private equity arm, Istithmar which owns most of the overseas assets, is expected to raise a maximum of $4.5 billion over a five year period. A short-term disposal plan will generate as much as $2 billion, it said.
The total debt figure of $39.9 billion did not include $11 billion of Istithmar's non-recourse asset level debt and $2 billion of Infinity debt.
Dubai World has previously said its Istithmar World portfolio and Infinity investment were ringfenced from its debt proposal agreed by a core group of bankers in May. "It is not easy to rebuild confidence (in Dubai) in a short span of time. We need to see more practical steps, new rules and regulations come to the market," said Samer al-Jaouni, general manager of Middle East Financial Brokerage Co. "Foreign investments have dramatically been affected. I believe by doing more practical steps - not only comments or promises - confidence can be really rebuilt."
Comments
Comments are closed.