Dubai World Said to Weigh Offering Equity to Reduce Debt Load

Dubai World, the emirate-controlled holding company with about $60 billion of debt and other liabilities, may offer equity stakes in units such as developer Nakheel PJSC to creditors or neighboring Abu Dhabi to avert potential defaults, people briefed on the matter said.

Dubai World’s options also include selling assets and seeking cash from the Dubai government, which could borrow from the United Arab Emirate’s central bank in Abu Dhabi, the people said, speaking anonymously because the talks are private. The plans are preliminary and are among several being discussed, the people said.

Granting equity in a unit such as Nakheel, the real-estate developer with $3.52 billion of debt due in December, may help Dubai World appease creditors and avoid a fire sale or bankruptcy of hotels, retailers and other assets the investment group amassed this decade, according to the people.

“The most pressing question for Dubai is what to do with Nakheel, because it’s the largest debt coming due until next year,” said Rachel Ziemba, a senior analyst covering sovereign wealth funds at Roubini Global Economics, a New York-based economic research firm. “Dubai is trying to hold out its asset sales in order to get better valuations.”