Dubai Group in debt restructure talks despite support withdrawal

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Dubai Group strongly maintained their $10 billion restructuring is still on despite reports that the Supreme Fiscal Committee (SFC), a part of Dubai?s Government, quit talks to inject government funds. This decision was in response to a letter by the company?s creditor banks requesting $2bn in support from ?the Government of Dubai or other equivalent quality equity?.

Dubai Group is a part of Dubai Holding, owned by Sheikh Mohammed Bin Rashid, Vice President of the UAE and the Ruler of Dubai. It is one of several companies in Dubai seeking to restructure their debts after the steep fall in property prices as a result of the global financial meltdown.

Mohammad Al Shabani, the Chief Executive of the Investment Corporation of Dubai, said last month that the emirate would make its debt payments this year. Dubai?s credit-default swaps (CDS) are the third highest in the Middle East after Egypt and Lebanon.

Of the $10bn debt, $6bn is owed to banks. These banks, a total of eight, were appointed to represent the creditors in two committees as Dubai Group tried to sign up an agreement on a debt structuring plan early last year. The committee of secure lenders is comprised of Paris-based Natixis SA?s Nexgen Unit and Dubai based Mashreq Bank PSC while the Royal Bank of Scotland Group PLC and Emirates NBD PSJC are front runners for the group of creditors with partially secured and unsecured assets.

The letter from the creditors was signed by Royal Bank of Scotland Group PLC and Natixis. According to the letter sent to Dubai Group, the unsecured creditors have also requested a bank guarantee of $1.8bn from ?the Dubai government or other equivalent quality equity?.

?If the government has stepped away from the table, all things which we have asked for are impossible because they (Dubai Group) don?t have the ability to give us anything,” said one unidentified source to Reuters.

As per reports Dubai Group had stopped interest payments as early as August 2010 to creditors in order to dispose of assets but efforts have been hampered due to the eurozone crisis.

The company, despite setbacks, has voiced confidence that it was still in negotiations to reach a mutual agreement that would be reasonable for all stake holders.

Source: Bloomberg News, Reuters, The National, The Telegraph

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