DUBAI, (Reuters) – Dubai World, the state-owned holding company grappling to restructure about $22 billion in debt for its property units, could unveil some details about its plans as early as Thursday, bankers said.
Dubai sent shockwaves through global markets on Nov. 25 when it said it would request a standstill on billions of dollars of debt linked to Dubai World and its property units Limitless and Nakheel, developer of three palm-shaped islands.
“We have been notified internally that Dubai World is likely to let creditors know its debt restructuring plans today,” an Abu Dhabi-based banker said, without elaborating.
A report in Alrroya Aleqtissadiya quoted an unidentified banking source saying that Dubai World would “answer its creditors electronically today (Thursday)”.
Dubai World has set up a website to communicate securely with creditors, bankers said, adding that although there are indications of an imminent announcement to creditors, no detailed plans were likely to be presented.
“There will likely not be many details, but they (Dubai World) want to let the creditors know they’ll keep servicing their debts,” said a banker in Dubai.
“I hope there is no absolute standstill. Dubai World is servicing its debts, and I expect the restructuring will just extend maturities. It’s likely going to be a friendly rescheduling,” the banker said.
Dubai World disappointed creditors last month by making little progress in its intention to request a formal standstill but said it would pitch a proposal in January.
“The consensus is that the whole process will take some time, so if there was some sort of announcement it’s likely to only be a preliminary update,” said Julian Bruce, EFG-Hermes director of institutional equity sales.
“I doubt there will be any real substance at this stage.”
A $10 billion lifeline from wealthier neighbour Abu Dhabi helped Dubai World stave off default on a $4.1 billion Islamic bond from Nakheel and provided enough funds to service debts until April.
But Dubai’s debt dilemma remains potent, with further upcoming maturities from other prominent members of Dubai Inc, the network of government-owned companies, likely to affect investor sentiment.
“It’s important to note that the debt situation in Dubai is little changed from what it was before the announcement of the standstill request,” said Daniel Broby, chief investment officer at Silk Invest, an asset management company.
“The Nakheel 2009 was a little different to other portions of debt within the group: firstly it was the largest sukuk structure in the Emirate, and secondly it carried the guarantee of the parent. Other tranches of debt do not.”
A Dubai World spokesperson said in December that the company was aiming to have a restructuring plan in place by April. In December, a special tribunal to hear cases submitted against Dubai World was set up by decree.