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Tuesday, 1 June 2010

Dubai’s debt problems put in a holding pattern | beyondbrics |

After a delay of almost a month, the 2009 financial results of Dubai Holding’s commercial arm were unveiled today.

The 88-page document released this morning on Nasdaq Dubai’s website from Dubai Holding Commercial Operations Group, shines a spotlight on the economic turmoil afflicted on the emirate by Dubai Holding, a conglomerate majority owned by the ruler, Sheikh Mohammed bin Rashid Al Maktoum.

The results are another stark reminder of the challenges facing Dubai since the real estate bubble collapsed, dragging down economic activity and confidence in the once-invincible emirate.

Abu Dhabi to create regional semiconductor hub

Abu Dhabi on Tuesday announced plans to bring the global chipmaking industry to the Middle East, as the oil-rich emirate seeks to diversify its economy into knowledge-based industries.

Ibrahim Ajami, chief executive of the state-owned Advanced Technology Investment Company, said his company would invest in building an advanced technology cluster on a 3km-square piece of land just outside the Abu Dhabi international airport.

Besides building infrastructure, Mr Ajami said Atic would also increasingly explore “the various modes of investment required” to start attracting other semiconductor companies to Abu Dhabi.

Dubai Shares Slump to 14-Month Low on Dubai Holding Unit Loss -

Dubai shares fell to a more than 14- month low on concern losses at state-controlled entities will threaten economic recovery after a real estate and hospitality company owned by the emirate’s ruler posted a full-year loss.

Emaar Properties PJSC, the developer of the world’s tallest skyscraper, dropped to the lowest in almost three months, and Arabtec Holding PJSC fell to the lowest level since Dec. 13. National Central Cooling Co., the refrigeration company that delayed payments on an Islamic bond last week, also tumbled. The DFM General Index retreated 3.1 percent to 1,531.15, the lowest since March 2009. The Bloomberg GCC 200 Index of 200 companies in the Gulf slid 1.2 percent at 2:46 p.m.

Dubai Holding Commercial Operations Group LLC reported a full-year loss of 22.8 billion dirhams ($6.2 billion) after a profit of 10 billion dirhams in 2008 as property prices plunged in the Gulf’s trade and tourism hub. Dubai Holding LLC, Dubai Holding Commercial’s parent, and its units owe banks $12 billion and have begun talks to roll over some loans, a person with knowledge of the matter said May 10.

Globalfoundries to Spend $3 Billion-Plus on Expansion (Update1) -

Globalfoundries Inc., seeking to challenge Taiwan Semiconductor Manufacturing Co. in the made-to- order chip market, will spend more than $3 billion to boost production at its factories in New York and Germany.

The company will increase the size of a new plant in upstate New York and add a production line to existing factories in Dresden, Germany, said Chief Executive Officer Doug Grose. The investment is in addition to the $6 billion already promised by the company’s owners, he said.

Sunnyvale, California-based Globalfoundries was created last year when Advanced Micro Devices Inc. spun off its chipmaking plants into a venture with Advanced Technology Investment Co., the Abu Dhabi government’s investment arm. After taking majority control, Advanced Technology bought Singapore’s Chartered Semiconductor Manufacturing Ltd. and is merging that company with Globalfoundries, creating one of the world’s largest contract manufacturers of chips.

Dubai Holding unit reports $6.4bn loss

The commercial arm of Dubai Holding, the conglomerate owned by Sheikh Mohammed bin Rashid Al Maktoum, the emirate’s ruler, on Tuesday reported a loss of Dh23.5bn ($6.4bn) for 2009.

The losses, which were caused by real estate impairment charges, were announced as the group holds talks with banks to refinance a $555m loan due in July.

After making a profit of Dh9.8bn in 2008, Dubai Holding Commercial Operations Group, Dubai Holding’s non-financial arm, said revenues had slumped 28.5 per cent to Dh9.5bn in 2009. Its property arm reported declining real estate sales and project delays.

DHCOG, described by analysts as the “least impacted” wing of Dubai Holding, has engaged PwC as it negotiates a rollover of a $555m loan due to banks that include RBS, Citigroup and Standard Chartered.

“There is not a heap of options for the banks here – the assets and cash flows are good, but the talks have been left rather late,” said one person familiar with the discussions. DHCOG includes the merged property companies Dubai Properties, Sama Dubai and Tatweer, as well as Jumeirah, a hotel chain, and the Tecom internet and media business parks.

In a statement on Tuesday, Ahmed bin Byat, chief executive of Dubai Holding, said: “As a result of the measures we took in 2009, DHCOG is well placed to meet its financial obligations in 2010.”

“There is no need to restructure outstanding debt as discussions are taking place with banks to roll over our existing facilities at commercial terms,” he said.

The refinancing talks come as other Dubai Holding units negotiate with creditors over parts of the conglomerate’s overall $12-$15bn debt burden. Dubai International Capital last week asked for a debt extension until the end of September as it faces a $1.25bn syndicated loan repayment in June.

Dubai Group, another financial arm, also faces upcoming maturities. Lazard is advising both investment companies.

DHCOG said it expected to persuade bankers to roll over loans as it will take time to extract value from its Dh124.5bn in assets, much of which is locked up in the company’s land bank in Dubai.

Dubai real estate values are starting to stabilise, according to some analysts, though others are concerned that upcoming supply will outmatch demand and cause prices to decline further.

DHCOG said it expected the Dubai real estate market to stabilise this year and recover in 2011.

Jumeirah ended the year in a strong position, said DHCOG, with occupancy levels falling to 73.4 per cent across the chain’s portfolio.

The chain, which sees average occupancy improving by 2.3 per cent this year, plans to open at least 10 more hotels over the next 18 months out of 20 new hotels under construction.

Separately, Drydocks World, a unit of Dubai World outside the troubled conglomerate’s restructuring proposal, appointed a new board on Monday, replacing chairman Sultan bin Sulayem with Khamis Buamim, amid talks to restructure $1.7bn in debts.

Dubai Holding unit posts $6.2 bln loss in new hit | Reuters

Dubai Holding Commercial Operations Group (DHCOG) posted a $6.2 billion loss for 2009 on Tuesday due to Dubai's property crash and said it had access to emergency funding if needed, in the latest setback to the emirate's finances.

DHCOG said it was in talks with banks to roll over debt, was considering asset sales and was renegotiating balances owed to trade creditors after the crash put its cash flow under severe pressure.

DHCOG is a unit of Dubai Holding, the conglomerate owned by the emirate's ruler that belongs to the matrix of firms commonly known as Dubai Inc., which was badly battered by the financial crisis and remains in negotiations with creditors.

Major rail projects build up steam - The National Newspaper

Major rail projects in Abu Dhabi and the wider GCC region are beginning to take shape after a lull of more than six months in project announcements.

This year is shaping up as an important one for Abu Dhabi’s plans to build a tram and metro network, with the Government soon to announce the winners of feasibility studies, industry executives say.

It will also be crucial for a 1,500km federal freight and passenger rail project overseen by Union Railway, which should refashion the country’s transport networks and eliminate the need for the thousands of lorries that currently carry goods and clog the country’s roads.

Israeli Diamonds Are Dubai’s Best Friend as Profits Beat Policy -

Two women gaze through the eye slits of their black niqabs at the window of Dubai’s latest jewelry store. The glass cases, lit by crystal chandeliers, show gems that include a 52-carat diamond priced at $25 million.

The name of the store’s owner appears only on catalogues and gift bags: Israeli billionaire diamond investor Lev Leviev, who has four other outlets in the emirate under the Levant name.

He is expanding just as Dubai vows to crack down on links with Israel after the January murder of a senior Hamas official that local police blamed on Israeli agents. Separately, companies in the emirate import high-value polished diamonds from Tel Aviv for sale to Gulf neighbors in defiance of a boycott of Israeli goods by Arab nations, including the United Arab Emirates to which Dubai belongs.