Dubai World mulls options

Dubai, Dec. 1: In a “constructive” progress to move out of its debt repayment crisis, troubled conglomerate Dubai World has said it is considering alternatives for obligations worth $26 billion, an amount nearly half of its total debt.
“The total value of debt carried by the companies subject to the restructuring process amounts to approximately $26 billion, of which approximately $6 billion relates to the Nakheel sukuk (Islamic bond),” state-owned Dubai World said in a release.
This statement came as a breather, after the Dubai government on Monday hinted that it may not bail out debt-ridden Dubai World unconditionally and asked its creditors to share responsibility for the crisis.
The restructuring move by Dubai World is likely to ease investor sentiment globally. The company would look at options for cutting its debt, including asset sales, it added.
Markets across the world went into a tailspin following the November 25 announcement by Dubai.
On that day, the Dubai government had announced the restructuring of Dubai World, and asked all providers of financing for the company and Nakheel to “stand still” and extend maturities until at least May 30, 2010.
Accordingly, benchmark indices in the Asian and European markets showed significant rebounce and were trading in the positive territory. However, bourses in Dubai as well as Abu Dhabi continued to reel under pressure.
Dubai’s ruler Sheikh Mohammed bin Rashid al-Maktoum, who is also the United Arab Emirates’ vice-president, prime minister and defence minister, said the global reaction had shown “a lack of understanding.” “We are strong and persistent,” he said.
Sheikh Khalifa bin Zayed al-Nahayan, the president of the UAE and ruler of Abu Dhabi, said the UAE economy was showing signs of growth in the fourth quarter.
Dubai’s troubles could shift political power in the UAE, a seven-emirate federation celebrating 38 years of independence on Wedne-sday, towards oil-producing Abu Dhabi and away from its exuberant neighbour.
In London, ratings agency Moody’s said it estimated the Dubai government and its related entities carried $100 billion of debt, above the market estimate of $80 billion.