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Capital Markets

Dubai: Investors welcome Dubai World bailout

Limitless might have hurried restructuring; Doubts remain on second conglomerate

 

Non-government creditors to Dubai World will be repaid in full

Non-government creditors to Dubai World will be repaid in full

Dubai announced a restructuring proposal at the end of March in which non-government creditors to Dubai World, the state investment agency, would receive 100% of their claims via new debt tranches.

Dubai World will pay back its non-government creditors in full, amounting to $14.2 billion, through two new tranches of debt with five-year and eight-year maturities.

The Dubai government added that it would inject $9.5 billion of new funds into the group, as part of its $23 billion debt-restructuring plan. Of this $9.5 billion, $5.7 billion will come from what’s remaining of the $10 billion of loans given by Abu Dhabi to Dubai last year. That means the Dubai government will have to stump up only $3.8 billion, split over the next three years.

As part of the proposal the government will convert its $8.9 billion claim on Dubai World into equity, so ensuring that other creditors rank ahead of it in the group’s capital structure.

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