Waterfront owner in trouble

Dubai - The government of Dubai said on Wednesday it will ask creditors of its severely cash-strapped Dubai World conglomerate to accept a debt moratorium for at least six months.

The government said also it was revamping Dubai World, which owns giant property developer Nakheel, the same day as Dubai announced securing five billion dollars in a new bonds issue subscribed fully by two Abu Dhabi banks.

Dubai World also owns a number of properties in SA, including the V&A Waterfront in Cape Town and the Shamwari Game Reserve in the Eastern Cape.

"Dubai World intends to ask all providers of financing to Dubai World and Nakheel to a 'standstill' and extend maturities until at least May 30 2010," said a statement issued by the Dubai Financial Support Fund.

Nakheel was due to pay off some $3.5bn in maturing Islamic bonds in December.

The statement said the new bond issue, part of a $20bn support fund established to deal with Dubai's debt obligations, "is not linked to the restructuring of Dubai World and is meant for the general purposes" of Dubai's support fund.

Dubai also hired Aidan Birkett from Deloitte LLP to "oversee the restructuring process and ensure the continuity of Dubai World's operations," the statement said.

Dubai's total debt reached $80bn last year, of which government companies owed some $70bn. Dubai World alone reportedly has $59bn in liabilities.

The fortunes of the city state have changed as the global financial crisis dried up available financing and brought its rapidly growing real estate sector into a shrieking halt.

- AFP