Dubai World Tries to End Debt Circus

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Dubai World may ask creditors for five to eight years to re-pay its $22 billion in debt as part of a restructuring proposal that could come as early as this week, people close to the matter say.

The Emirates-based, conglomerate and its creditors are also weighing a structure that would give creditors a share of the proceeds from asset sales, or possibly a share in future profit of the group, if it cannot fully meet its interest-payment obligations, one of these people said.

Executives from members of the creditors' steering committee, which include Standard Chartered PLC, Royal Bank of Scotland Group PLC and HSBC Holdings PLC, flew from London to Dubai last week where they held informal talks about the plan, people close to the matter said. The creditors' steering committee represents the interests of Dubai World's 90 lenders, and KPMG, an accounting and business-services firm, is representing it.

A formal proposal could come this week, although a final solution to which all the parties agree could take several months to negotiate, the people said.

A spokeswoman for Dubai World declined to comment. A spokeswoman for Dubai's department of finance also declined to comment.

Extending the time-frame to re-pay the debt would be an alternative to a government-backed proposal that would pay creditors back much faster, but with a 40% "haircut" for creditors. U.K. banks favor a full repayment over a long time period, a person close to the matter said.

Dubai World representatives haven't indicated which assets they might be willing to sell in order to pay creditors. The conglomerate owns assets as varied as DP World, its giant ports operation, a $5 billion investment in a Las Vegas casino development with MGM Mirage, and a 20% stake in Canada's Cirque du Soleil Inc. performance troupe.

Dubai World, the investment vehicle for Dubai, shocked international markets in November when it announced it would seek a six-month standstill on its debts. In December, neighboring Abu Dhabi, the capital of the United Arab Emirates, extended Dubai $10 billion in funds, in addition to a separate $10 billion infusion by the UAE in February 2009.END