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December 8, 2009

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Dubai World's prized assets not part of debt restructuring

DUBAI moved yesterday to ring-fence prized assets from the US$26 billion debt restructuring of Dubai World, denting already fragile investor sentiment ahead of talks between the struggling conglomerate and key creditors.

Bahrain's central bank governor said the kingdom's exposure to Dubai World was limited, echoing top monetary officials in Saudi Arabia and Oman, while the biggest lenders in Qatar and Deutsche Bank both said they had no exposure.

Dubai World is expected to meet its main bank creditors this week to discuss a request to delay debt payments that has shaken global markets and damaged the reputation of the Gulf's business hub, bankers said.

London-listed Standard Chartered, HSBC, Lloyds and Royal Bank of Scotland will attend, along with local lenders Emirates NBD and Abu Dhabi Commercial Bank, an unnamed Abu Dhabi bank executive said last week.

Dubai's finance chief said yesterday that state-controlled Dubai World might sell some assets to finance its commitments, but that the emirate's government would not chip in with any disposals of its own.

"Part of obtaining finance is selling assets ... belonging to the company and not the government," Abdulrahman al-Saleh, director general of Dubai's department of finance, told Al Jazeera television.

"There is confusion in the media that the government plans to sell assets ... The company has foreign investments and real estate investments abroad. There is nothing to prevent selling these assets."

The struggling conglomerate on November 30 shed some light on how it planned to restructure the US$26 billion debt pile, including through asset sales. It said the restructuring excluded firms on a "stable financial footing" such as Istithmar World, DP World and Jebel Ali Freezone, implying its global crown jewels would not be up for grabs.

Istithmar's portfolio ranges from US high-end retailer Barneys to the luxury W Hotel in Washington, DC, as well as sought-after property in London including 10 Whitehall Place.

Infinity World, another unit exempt from the plans, is a stakeholder in MGM Mirage.

"They need to do this in order to support their statements about the separation between Dubai World and Dubai government ... The question is now which assets and at what price," said John Sfakianakis, chief economist at Banque Saudi Fransi-Credit Agricole Group in Riyadh.


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