Fin24

Govt support for Dubai World?

2010-03-24 14:10

Dubai - Dubai's government will help its embattled Dubai World conglomerate, which is negotiating the restructuring of $22bn of debt, to pay off short-term loans, Al-Ittihad daily said Wednesday.

"Dubai World will receive support from the Dubai Financial Support Fund" to pay off loans due in the short-term, the Abu Dhabi-owned newspaper cited "informed sources" as saying.

The support fund was established last July to soften the blow from the global financial crisis.

The support "is part of proposals by Dubai World" for restructuring the $22bn of debt, the newspaper quoted its sources as saying.

The proposals will be submitted shortly to Dubai World's creditors, according to local media.

"We are still on track to present a formal proposal to creditors in March," a Dubai government spokesperson said when asked by AFP when the proposals would be submitted.

Dubai World's chief restructuring officer Aidan Birkett met with leading creditors in London at the beginning of the month.

The emirate in the United Arab Emirates federation shook global stock markets last November when it called for a debt moratorium for its Dubai World conglomerate.

The conglomerate began negotiations with creditors in December, shortly after last-minute assistance from Abu Dhabi allowed Dubai to pay off $4.1bn owed by Dubai World subsidiary Nakheel.

Dubai said last month that it had advanced $6.2bn to Dubai World over the last 12 months, and expressed willingness to lend more if needed.

The emirate borrowed heavily during boom years preceding the global economic downturn, fueling its rapid growth into a regional trade hub.

Dubai World's total debt, including liabilities, is around $60bn.

The emirate's debt is estimated at between $80bn and $100bn, but some analysts say it could be as high as $170bn.

- AFP