Wednesday, Feb 08, 2012
DUBAI (Zawya Dow Jones)--Dubai's government-linked companies can sort out their debt issues without state assistance, a senior Dubai official said, following the rejection of a request from bank creditors of Dubai Group for government support in its $10 billion debt restructuring.
"The government of Dubai provides the necessary support but isn't legally obligated to guarantee the debts of government-related companies," the government official said, declining to be named.
"GREs are independent in managing their own financials and have the capacity to deal with their creditors," the official added.
Dubai Group, a unit of Dubai Holding, said in a letter last week to its creditor banks that no external financial support would be available in its restructuring, according to a banker who has seen a summary of the document. The letter came in response to a request from the banks in December for $2 billion of state support, seen as an attempt by the banks to gain leverage in the discussions.
The government official declined to comment directly on the Dubai Group talks.
Dubai rejected a similar request last year from bank creditors of Drydocks World, a government-owned company involved in talks about restructuring some $2.2 billion of debt.
Dubai Group is restructuring $6 billion of bank debt and $4 billion of inter-company loans. Its parent company, Dubai Holding, is the personal investment vehicle of Sheikh Mohammed bin Rashid Al Maktoum, the Ruler of Dubai. Dubai Group owns a large portfolio of stakes in property and financial services firms, including Noor Islamic Bank.
While creditors of Dubai Group and Drydocks World were denied government help, some government-related companies in the emirate have received aid from the Dubai Financial Support Fund, set up with $20 billion of funding in the early stages of Dubai's debt crisis. More recently, however, the government appears to be attempting to step back from direct involvement in debt restructuring talks.
Dubai Group is among a number of government-linked companies that are still in talks to extend debt maturities. In addition to Drydocks World, Zabeel Investments, a company owned by Dubai's Crown Prince, Sheikh Hamdan bin Mohammed Al Maktoum, is working on a $1.6 billion restructuring.
Dubai and its government-connected businesses have $14.5 billion of debt coming due this year, according to Bank of America Merrill Lynch research.
-By Leila Hatoum, Nico Parasie and Asa Fitch, Dow Jones Newswires, +971 4 446-1685, asa.fitch@dowjones.com
Copyright (c) 2012 Dow Jones & Co.
(END) Dow Jones Newswires
08-02-12 1420GMT
