Dubai World wins investors' trust

26/03/2015 12:27 AST

Dubai: Dubai World has been granted approval to end court proceedings relating to its $14.6 billion debt restructuring deal, according to a document on the court’s website.

The action allows lawyers for the conglomerate to gather the signatures of creditors in support of the deal outside the Dubai World Tribunal, the special court that had been overseeing the process.

In January 2015, the state-owned conglomerate announced that it had reached an agreement with a majority of creditor banks to amend and extend terms on its debt.

The deal entails early repayment of $2.92 billion due this year and the extension of debt due in 2018 to 2022. The long deliberated deal underscores the strong recovery of Dubai economy and the four-year extension in debt period is expected to help the government balance its long-term liabilities comfortably, according to analysts.

Sources familiar with the matter said on Wednesday that a formal sign-off for the restructuring could occur within days or weeks.

Dubai World, which was forced to restructure around $25 billion of debt in 2011, had brought the case under Decree 57, a law the government introduced to help administer restructuring through the tribunal in the absence of an effective insolvency law in the UAE.

Decree 57 requires that at least 66.67 per cent of creditors (by value) vote to approve the agreement and existing commitments from lenders means that this threshold has already been comfortably exceeded. But after gaining 100 per cent support for the plan, Dubai World’s lawyers applied to withdraw the application during a court hearing in February.

Tribunal member Sir David Steel approved the application on Monday afternoon, according to the court document. Dubai World had been in long-running talks with over 100 banks and financial institutions to reschedule its debt payments following a $25 billion restructuring agreement signed in 2011.

The conglomerate had been shuffling some its assets ahead of the planned repayment this year. In November, it sold Economic Zones World, which owns the Jebel Ali Free Zone, to DP World for $2.6billion.

Other assets divested include warehouse developer Gazeley, which was sold to Brookfield Asset Management, The Fontainebleau hotel in Miami, and the Atlantis Resort on the Palm Jumeirah, which was sold to ICD. Last month, Istithmar World sold its retail unit, Retailcorp, to Marka for $60 million.

Lloyds Banking Group and Natixis had reportedly sold their holdings in debt of Dubai World.

Royal Bank of Scotland also had sold at least part of its exposure in the conglomerate to help pave the way for Dubai World to secure 100 per cent creditor assent for its restructuring.

Khaleej Times