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Restructuring Gulf-style

Deals with creditors for the high-profile corporate collapses in the Middle East have a distinctly local flavour. They will set the standard for the future, and if the case of Dubai World is anything to go by, generate renewed interest and activity in the region. Nick Lord reports.

Dubai World’s CityCentre development came to a halt until Moelis & Co found a way to keep moving with letters of credit

Dubai World’s CityCentre development came to a halt until Moelis & Co found a way to keep moving with letters of credit

LAST MONTH, AFTER a long and painful process, Dubai World received the go-ahead from 99% of its creditors to restructure $14.4 billion in bank debt. The authorities in the UAE quickly jumped on the good news, as Dubai launched a $1.25 billion sovereign bond. Meanwhile, investors and lenders to Dubai World’s property arm, Nahkeel, were nearing conclusion of their own negotiations, which include seeking terms on $10.9 billion outstanding to financial creditors.

And in Kuwait two investment companies – The Investment Dar and International Investment Group – were hoping to find a resolution to their own restructuring needs. However, given that their debts are largely structured under Islamic law, there appeared every chance that negotiations would drag on for some time yet.

As these deals inch towards a conclusion, it is instructive to see how such restructurings in the Middle East differ from those in the west and to look at what standards have emerged so far that might serve as a template for other restructuring deals that are surely around the corner.

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