DUBAI, (Reuters) – Dubai’s ruler appointed a new board for Dubai World, the flagship conglomerate which struck a deal to restructure $25 billion in debt earlier, appointing his uncle and key adviser as chairman on Sunday.
The UAE’s state news agency WAM said Sheikh Ahmed bin Saeed al-Maktoum – who spearheaded Dubai’s attempts to recover from last year’s crippling debt crisis as head of the Supreme Fiscal Committee (SFC) – was named to the top spot.
Sheikh Ahmed is also chairman of Emirates airline and a top adviser to ruler Sheikh Mohammed bin Rashid al-Maktoum.
Other SFC members were also named to a new board of directors, including Mohammed al-Shaibani and Ahmed Humaid al-Tayer. Dubai finance director Abdulrahman al-Saleh is also a new director.
“The board’s functions include approving plans to restructure (Dubai World) and its affiliates, as well as approving the draft annual budget and final accounts and adopting its administrative and financial systems and those of its subsidiaries, the adoption of financing and borrowing from financial institutions and providing them financial guarantees,” said an official statement carried by WAM.
State-owned Dubai World won creditor support from all its creditors in November for a $25 billion restructuring plan, one of the first major milestones in resolving the debt headache which has plagued the Gulf Arab emirate since last year.
In its debt deal, presented to creditors earlier this year and seen by Reuters, Dubai World had said there would be a new managing director and chief financial officer for the company, whose assets range from shipping to real estate. Sunday’s announcement made no reference to this.
Observers were divided on Sunday about the ramifications of the move with some viewing it as a confidence boosting move while others fretted that it may signal more issues to come.
“If they put the heaviest hitters in Dubai on the board of the company that was successfully restructured, I sense they realise that the DW story is certainly not over yet,” said a financial industry source, asking not to be identified.
Dubai World plans to sell its prized assets over a period of eight years to generate as much as $19.4 billion to pay off creditors, according to the restructuring proposal document obtained by Reuters.
It said in the document asset disposals over an eight-year period will help generate up to a maximum of $19.4 billion, while similar sales based on current prices would be worth a maximum of $10.4 billion.
“This is very good news, not only because of Sheikh Ahmed’s track record at Emirates group, but also as a statement from the government,” said Haissam Arabi, chief executive and fund manager at Gulfmena Alternative Investments.
“The fact is Sheikh Ahmed is very good for Dubai World’s restructuring plan and will give more confidence to creditors that the government is very serious about fulfilling
the obligations of the restructuring.”