Dubai World Wednesday signed a final deal with all its creditors as part of the Dubai government-owned conglomerate's restructuring of nearly $25 billion worth of debt, bringing to an end a lengthy process of negotiations.
Dubai World, in a statement emailed by the Dubai government's media office, said it signed "today a final agreement on the restructuring of all its financial obligations with all creditors."
"According to the new agreement for the restructuring of Dubai World's debt....the group will repay its debts in two phases, the first over five years during which it will repay $4.4 billion, while the rest of its debt worth $10.3 billion will be repayed over a period of eight years," the statement said, adding that the average interest rate will be fixed at 2.4% throughout the loan's term.
The amount covers debt held by banks. The Dubai government holds the group's remaining debt.
The terms of the agreement are "completely fair to all parties," Mohammed Ibrahim Al Shaibani, director general of the Dubai ruler's court and a Dubai World board member, said.
Dubai World, one of the government's flagship conglomerates, in September secured the support from over 99% of its creditors for its debt-restructuring deal, which was finalized a month later, ending more than 10 months of negotiations. The group shocked the financial community in November 2009 when it announced that it would seek to delay payments on its debt pile worth $23.8 billion at the time.
The conglomerate, like other Dubai government-owned groups, built up debts during years of frenzied spending that included some of the world's most extravagant real-estate projects developed by its Nakheel unit--seen to be at the center of Dubai's financial problems--and on the purchase of international properties by investment arm Istithmar World as prices peaked.
"We are optimistic and hopeful of Dubai World's ability to overcome the consequences of the global financial crisis...thanks to a combination of sincere efforts and determined belief in putting this company at the front of a new stage of growth," Sheik Ahmed Bin Saeed Al Maktoum, the company's chairman, said.
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