Dubai Group announces debt restructuring plans (By IFN)

Dubai Group announces debt restructuring plans

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UAE: Dubai Group’s announcement to restructure up to US$10 billion of its debt is said to be a positive sign of the emirate’s recovery, as the deal marks the last major debt restructuring following the Dubai credit crisis in 2009, according to sources. The investment firm, which is owned by the Dubai ruler, Sheikh Mohammed Rashid Al Maktoum, has been in talks with its creditors since the credit crisis caused property prices to plummet in the emirate – hurting the group’s portfolio of assets. Dubai Group, which is a unit of Dubai Holding, is said to currently owe up to US$6 billion to its creditors, comprising mostly of Gulf and Egyptian banks. Emirates NBD, Mashreq and Natixis are amongst those that are owed a major chunk of the debt. Terms of the restructuring have been tabled to the Group’s creditors and are awaiting their final approval. “We are now nearing the end and are confident that all parties will work with us to finalize the restructuring by early summer,” said Fadel Al Ali, the acting CEO of Dubai Group. Part of the restructuring plan is said to include a 12-year extension on its current repayments, as well as the inclusion of creditors onto the group’s board. The restructuring proposal is expected to go through in a matter of weeks and it is said that there is much at stake for the emirate as a whole, should the deal fall through. “The conclusion of this restructuring would remove substantial uncertainty and certainly be positive for investor sentiment towards the Dubai story in general,” an industry player was quoted as saying. Dubai Group's investments include stakes in Bank Muscat, Bank Islam Malaysia and EFG-Hermes. Over the last year, Dubai has experienced recovery across various sectors in its economy; primarily in property and tourism.