Dubai World gets majority creditor backing for $14.6 billion debt deal
By Tom Arnold and David French
DUBAI (Reuters) - State-owned conglomerate Dubai World [DBWLD.UL] edged closer to a second major restructuring in four years on Monday after announcing it had reached agreement with a "substantial majority" of creditors to back its $14.6 billion debt deal.
However, despite having enough backing to effectively prevent challenges to its new deal, a relatively untested court process to impose it will mean formal completion is still months away.
Dubai's economy has rebounded strongly from a local property crash which triggered a wave of debt restructurings at state-owned entities at the turn of the decade -- most notably Dubai World's request for a debt standstill on $25 billion of obligations in 2009 that resulted in a global markets sell-off.
It has been in talks with lenders for months to secure a renegotiation of terms of the debt deal it signed in 2011 which followed the 2009 standstill request, given the size of the $10.3 billion 2018 repayment and the slow pace of asset sales.
An agreement would alleviate worries over Dubai's largest debt hangover and may also lift the upcoming results of local banks. A number, including Emirates NBD ENBD.DU, have said they are studying whether to reverse provisions held against their share of the debt.
On Monday, Dubai World said it had made a "voluntary arrangement notification" under Decree 57 legislation to amend its existing debt deal, the first formal notification from the conglomerate that support from creditors for a new deal had passed the 67 percent mark -- the level needed to authorize a change of restructuring terms.
BIG TEST Continued...