Dubai World wins over creditors to $24.9-billion debt plan

DUBAI, United Arab Emirates (AP) — Dubai World it has won over nearly all its creditors to a $24.9-billion debt restructuring plan, bringing the struggling conglomerate a key step closer to resolving a financial crisis that has dragged on for months.

By winning broad support for the revised terms, the state-run company said it should be able to finalize the restructuring process in a matter of weeks. That will give the sprawling firm — with interests ranging from seaports and hotels to luxury retailer Barneys New York — greater room to maneuver.

“What it means is that Dubai World will have more time to sell off assets and repay creditors and it won’t pay punitive rates on this extra time,” said Akram Annous, deputy fund manager at Dubai-based investment bank Al Mal Capital.

Dubai World says it has received formal agreements from about 99 percent of its creditor banks, which represent nearly all the debt involved.

Sheik Ahmed bin Saeed Al Maktoum, chairman of Dubai’s Supreme Fiscal Committee, called the revised terms offered to creditors “a fair and balanced restructuring proposal” that will put Dubai World “on a sound and stable financial footing whilst enabling it to realize the full potential of its underlying businesses.”

The announcement, which came during a holiday weekend in the region, moves Dubai closer to closure on at least one chapter of a crisis that has resonated well beyond the small Persian Gulf emirate.

Dubai World’s acute credit problems sent shock waves though global markets last November when the company unexpectedly announced - again over a holiday weekend - that it was seeking new terms on billions of dollars in debt.

That announcement was effectively an admission that the company didn’t have the cash to cover all its bills, and reignited fears that the world’s financial system remains exposed to immense amounts of debt that won’t all be repaid as promised.

Winning support for its restructuring could help undo some of the damage done to the city-state’s reputation and provide a boost to other economies in the region, said John Sfakianakis, chief economist at the Riyadh-based Banque Saudi Fransi-Credit Agricole Group.

“It’s definitely a win for Dubai and a win for the creditors as well,” he said.

Interest payments and other costs were responsible for pushing the amount of debt needing to be restructured to $24.9 billion from an earlier estimate of $23.5 billion, according to a person familiar with the plan who insisted on anonymity as a condition for briefing the press.