Dubai World Invited Creditors for Detailed Meeting on Debt Restructuring

Dubai World is a struggling government run firm that invited creditors for a meeting in order to discuss the details on its debt restructuring.   From among the group of 80 creditors, sources told Reuters that they have received the invitation through the coordinating committee of the seven banks. The banks hold almost 60 per cent of Dubai World’s $14.4 billion in bank debt. The May deal will allow the banks to get their money back with five and eight year maturities. Some broader debt issues were also taken care of.

For the May deal to go through, Dubai World requires support from the lenders representing the two thirds for its debts, but in order to avoid a delay in the restructuring process, it hopes to get full backing. One of the sources said: “We expect some banks to be grumpy and to complain about the pricing, but then again a majority will likely agree as the alternative of letting the deal collapse is moving into unchartered territory.” Dubai World is also likely to organize workshops in Dubai itself, Hong Kong and London to allow bankers to ask the financial advisers questions about the terms of this debt proposal.

Banks those who are unhappy with the deal can file a claim with a special tribunal which is specifically set for this purpose only, however the legal experts have said that they may be hesitant in performing any legal action in the absence of any standards or guidelines. Another source has said that after this meeting, the details by the Dubai World’s creditors will be presented to their respective risk committees and the deal will then be approved or rejected within another three to four weeks time.