Ninety-nine percent of creditor banks for Dubai’s troubled Dubai World conglomerate have agreed to its proposal to restructure more than 20 billion dollars of debt, the company said on Friday.
Dubai World “has received formal agreement from over 99 percent by value and approximately 99 percent by number of its creditor banks to its restructuring proposal,” it said in a statement.
“This overwhelming support means that the company is well positioned to close the restructuring in the coming weeks,” it said.
Dubai, which borrowed heavily to fuel development, rocked global financial markets in late November when it said it might be forced to freeze debt payments by Dubai World, stoking fears of a state default over sovereign debt.
The Dubai government said on Friday that “approximately 24.9 billion dollars of liabilities” would be restructured under the agreement.
Dubai World had said on May 20 that it had reached agreement “in principle” with most of its bank lenders on restructuring.
Under the May agreement, the company will divide some of the debt into two tranches maturing in five and eight years respectively, while the government will convert aid to the company into equity.
The first tranche will bear 1.0 percent interest with no government shortfall guarantees. The second will also bear 1.0 percent interest, plus varying options of payment in kind and shortfall guarantees.
The government of Dubai and Dubai World had tabled this offer to bank lenders in March after three months of negotiations.
At the time, the government offered to inject 9.5 billion dollars into the Dubai World group and its most-troubled subsidiary, property giant developer Nakheel.
But the offer also stipulated that Nakheel become a separate entity, fully owned by the government.
Dubai World’s total debt, including liabilities, is around 60 billion dollars. The emirate’s debt is estimated at between 80 and 100 billion dollars, but some analysts say it could be as high as 170 billion dollars.