Rupert Wright and Frank Kane Dubai World could still meet the December 14 deadline on the US$4 billion (Dh14.69bn) payment of a sukuk from Nakheel under one option being considered by advisers to the conglomerate.
Repayment on schedule is one of four alternatives being considered by Dubai World, which announced on Wednesday it would seek a freeze on billions of dollars in debt repayments to bondholders and creditors.
The options are still being pondered by Aidan Birkett of Deloitte, the new chief restructuring officer of Dubai World. He was appointed to oversee its reorganisation, along with the investment bank Rothschild and the US corporate specialists AlixPartners.
If Dubai World pays back the sukuk, it would solve a problem for the company and its bondholders, and leave open the option of rescheduling bank debt and other liabilities, including bills owed to international contractors.
Other options being considered include a scheme to offer bondholders 80 per cent redemption of the value of their holdings, with a similar offer made to bankers.
Alternatively, Dubai World may move forward with the plan to seek a general “debt holiday” under the terms of last week’s standstill proposal, by which payments would be frozen until May 30 next year with a view to negotiating a rescheduling of all its debts.
In the most drastic scenario, Dubai World might embark on a general liquidation of assets in response to legal action by creditors. But this is thought to be a remote possibility, as it is likely to impair the value of Dubai World assets, leaving everyone worse off.
Legally speaking, creditors who lent to Dubai World during the boom years were fully aware that they were lending to government-related entities (GRE) and that the bonds were not guaranteed by the sovereign, advisers to Dubai believe.
“The Dubai Government has no legal obligations in respect of GRE indebtedness,” according to the prospectus of Dubai Government bonds sold earlier this year.
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