DUBAI, (Reuters) – Financial services firm Dubai Group, part of a conglomerate owned by Dubai’s ruler, has set up a creditor committee to discuss its debt obligations, becoming the latest entity in the Gulf emirate to face debt troubles.
Dubai Group, owned by Dubai Holding, said on Thursday in a statement to Reuters it would continue to service its debt.
“These discussions are making good progress and Dubai Group is confident of a positive outcome that is beneficial to all stakeholders.”
Dubai Group has a $1.5 billion murabaha facility due in August 2011 in which 24 banks have participated. The arrangers included Al Hilal Bank, First Gulf Bank, Noor Islamic Bank, Al Khaliji Commercial, Royal Bank of Scotland, and Standard Bank.
A banking source, speaking on condition of anonymity, said the bulk of the exposure still lay with the top eight banks on the deal. “We knew they were in difficulty, in significant financial trouble,” the source said.
Another source said Al Hilal, National Bank of Abu Dhabi, Noor Islamic, and RBS, were among the creditor coordinating committee.
Dubai Group, which focuses on banking, insurance and investments, has stakes in Dubai-based investment bank Shuaa Capital, Greek group Marfin Investment Group,and Australian company Citigold Corp.
Dubai Group’s announcement came on the heels of a raft of restructuring in the Gulf Arab emirate after a property collapse combined with the global downturn
Flagship conglomerate Dubai World reached a $25 billion restructuring deal with creditors in September.
The state-linked firm shocked global markets last November when saying it was unable to meet almost $25 billion in debt obligations. Dubai World’s Nakheel property unit narrowly avoided default on an Islamic bond last year after a last-minute cash injection from neighbouring emirate Abu Dhabi.
“For the last year, everybody has been in the dark and struggling to figure out what is going on,” a Dubai-based banker said. “It is useful to know that steps are being taken to address debt issues because it gives a little more comfort to the market.”
Dubai Holding’s other units, including Dubai International Capital (DIC) and Dubai Holding Commercial Operations Group (DHCOG) raised concerns with investors earlier this year when they sought delays for credit obligations.
DHCOG, Dubai Holding’s main unit, delayed repayment on a $555 million loan until Nov. 30 while DIC also requested a repayment extension on a $1.25 billion loan.