DUBAI, (Reuters) – A deal between creditors and troubled state-owned conglomerate Dubai World could be finalized within two weeks, said Sheikh Ahmed bin Saeed Al Maktoum, chairman of Dubai’s Supreme Fiscal committee in a TV interview.
Sheikh Ahmed said in an interview with CNN over the weekend that the government is in the process of refining the terms of the restructuring plan, which involves a $9.5 billion infusion of cash, but was positive that it will be well-received by creditors.
Dubai World offered lenders a 1 percent interest rate and 1 percent payment-in kind, a source familiar with the matter has said.
“It’s always been a generous proposal for everybody,” Sheikh Ahmed said. “We don’t want to do any damages to those companies They have to think about the long term being here in Dubai.”
Sources said banks have been grumbling about the sweet deal property developer Nakheel — a subsidiary of Dubai World — is receiving under the proposal.
Dubai’s debt plan offers Nakheel sukuk holders full payment on 2010 and 2011 Islamic bonds on maturity while trade creditors will be repaid through a mix of 40 percent cash and 60 percent in a sukuk, with a 10 percent annual return.
Separately, Sheikh Ahmed said he expects Dubai to show 5 percent economic growth in the medium-term as it focuses on its core businesses of tourism, re-export and services.
He added that the estimate was conservative and he believed that Dubai could show even stronger growth as the economic recovery continues.
Sheikh Ahmed said businesses involved in the real estate sector, which led the charge during Dubai’s heydays, will have to reassess their expectations in the future.