The ruler of Dubai's decision this week to put trusted players in charge of debt-ridden conglomerate Dubai World suggests new resolve to reestablish the tarnished brand name of the freewheeling emirate.
-- Dubai World board change seen as signal of serious intent
-- New directors are close to Dubai ruler Sheikh Mohammed
-- Dubai distanced itself from Dubai World debt last year
Sheikh Mohammed bin Rashid al-Maktoum, head of the local ruling dynasty and vice-president of the United Arab Emirates federation, appointed his uncle, Emirates Airlines chief Sheikh Ahmed bin Saeed al-Maktoum, to head Dubai World's board.
Emirates Airlines is one of Dubai's business success stories and Sheikh Ahmed comes to tackle Dubai World - preparing to sell assets to repay $25 million in debt - after he spearheaded Dubai's initial attempt to recover from last year's crippling debt crisis as head of Dubai's Supreme Fiscal Committee (SFC).
Other SFC members on the new board of directors include Mohammed al-Shaibani who is also head of the Dubai ruler's court and head of Investment Corporation of Dubai, the investment arm of the government, Ahmed Humaid al-Tayer and Dubai finance director Abdulrahman al-Saleh. "It gives more credibility to Dubai World's debt restructuring efforts. The message that it gives is the Dubai government, and Dubai authorities at the highest levels, are very keen, very serious to sort out this problem," said Shakeel Sarwar, head of asset management at Securities & Investment Co in Manama. "It basically gives confidence."
"At the end of the day, it's about having the trust to do the proper job. This decision from his highness demonstrates that kind of trust," said Christian Koch, an analyst at the Gulf Research Centre.
Sheikh Ahmed, he said, is known as someone who delivers.
Above all, experts say, the reshuffle sends a message that Dubai World remains a nagging concern for Sheikh Mohammed - who appeared to be in denial about the extent of Dubai's debt problems when they first became public last year. It also shows that he is serious about putting Dubai World in order as it moves into the next phase of massive restructuring.
Last year Dubai's government tried to distance itself from Dubai World's debt, saying the entity was not an arm of the state and had never guaranteed its borrowings.
But this week's reshuffle means it is now putting its clout and name behind the firm.
"Now that the restructuring of the company's liabilities is nearly completed, and with the new board in place, we can look forward to a brighter future," said a statement from Sheikh Ahmed's office.
"Top of the agenda for the new board will be to work with the other boards of the various entities within Dubai World to achieve optimal performance, and to ensure that the value of those assets is suitably unlocked," it said.
Dubai's liabilities are estimated at around $115 billion, with some $30 billion in bonds and loans owed by state-linked firms slated to mature in 2011-2012. Debt problems in Dubai, which accounts for more than 32 percent of the UAE's economy, have slowed the Gulf Arab state's economic recovery in 2010.
Dubai officials estimate the emirate will grow 2.3 percent this year - a more optimistic forecast than the IMF's projection for 0.5 percent growth.
The appointments implicitly guarantee the state-linked entity, which shocked global markets in November 2009 when it asked to delay debt payments, triggering layoffs and credit downgrades. It relied on $10 billion in aid from neighbouring emirate Abu Dhabi to get through the worst of the crisis.
"The appointment of this group of people who work well together reflects trust in the way they handled business so far," said one analyst who did not wish to be named. "It shows some maturity and learning from past mistakes or shortfalls."
The conglomerate, whose assets range from high-profile names in its stable sych as DP World, luxury retailer Barneys New York and Scotland's Turnberry golf course, sealed a restructuring deal with investors last month which includes a plan to sell prized assets over eight years to generate the funds to pay off creditors.
The plan includes new management and the presence of such senior figures could help assuage lender concerns about how the firm is being run while they wait for their money.
Analysts say one concern they have is that with these appointments the inner circle of people attempting to reestablish Dubai's reputation has just got smaller still.
"I think these guys are being overstretched," said a source who was involved with the Dubai World restructuring. "You will end up with the same names all over the place, which is dangerous as it can end in them having a monopoly on power."
State-linked firms such as Dubai World and property arm Nakheel have long been criticised for management inertia caused by the inability of executives to make key decisions without getting sanction from higher up.
"A small number of trusted Emiratis are controlling such an extensive set of businesses, they simply don't have sufficient time to do justice by each business," said Khuram Maqsood, a former investment director at Dubai-based investment company.
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