DUBAI World says it is in talks with banks to restructure about $US26 billion ($28bn) in debt, easing concerns that the government-owned investment arm will default on all of its $US60 billion in total liabilities. The restructuring will comprise several phases, and Dubai World says it is considering alternatives to its debt obligations. About $US6bn of the restructuring is related to its property unit, Nakheel World.
Dubai World, a conglomerate spanning real estate, ports and leisure interests, was seeking a debt standstill, a move that weighed heavily on investor confidence worldwide.
"Following a detailed review of the group's liquidity and capital structure, Dubai World has concluded that it should immediately consider alternatives in respect of the debt obligations of certain entities within the group," it said.
"The proposed restructuring process will only relate to Dubai World and certain of its subsidiaries, including Nakheel World and Limitless World."
Global jitters about a potential default caused stocks to plunge late last week on concerns about a potential new phase of the financial crisis.
The announcement that banks are in talks about restructuring triggered a rally in US markets just ahead of the close. Investors were rattled earlier in the session after the Dubai government said it would not automatically rescue the investment vehicle.
Moelis & Co has been appointed to advise on the restructuring, and Rothschild will remain a financial adviser.
Dubai World says the restructuring will relate to only some of its subsidiaries, including Nakheel and Limitless World.
The process will not include Infinity World Holding, Istithmar World, and Ports & Free Zone World, all of which are on "a stable financial footing," according to Dubai World.
Separately, law firm Ashurst says it is representing a group of creditors, who account for about a quarter of the nominal value of a $US3.5bn Islamic bond due next month, issued by Dubai World's Nakheel property unit.
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