Dubai’s aircraft leasing company is to postpone a $27 billion order for 200 new aircraft as the emirate continues to struggle with its debt mountain.
Dubai Holding Commercial Operations Group, the real estate and hospitality business, has posted a loss of $6.4bn for the last financial year against a net profit of $4.74bn the year before, due to a slump in the local property market plus a series of impairments.
Concerns over Dubai’s financial position have resurfaced after its largest private equity company, Dubai International Capital, requested a three-month extension to its debt repayments, in the latest blow to the emirate’s financial image.
Dubai World, the state-owned conglomerate whose debt problems sparked last year’s financial crisis in the emirate, has said it has reached an agreement “in principal” to repay its creditors. It has proposed repaying 30 percent of its $23.5 billion debt within five years and the remainder three years later.
Dubai World is to ask its creditors for up to eight more years to pay back a $22 billion debt. The troubled investment fund, which owns the QE2 cruise liner and Cirque du Soleil, will promise creditors that it will be able to repay the entire debt if granted the extension.
Creditors to Dubai World could be offered 60 per cent of the money they are owed, under the latest proposal to restructure the company’s $22 billion of outstanding debts. The deal would ensure repayment after seven years following a 40 per cent “hair cut”, with the agreement backed by the Dubai government.
Dubai World is putting the iconic cruise liner QE2 up for sale, as well as host of other interests including Cirque du Soleil, as it grapples to cut its $22bn debt mountain.
Creditors are meeting with Dubai World officials today to try and hammer out a debt restructuring deal. More than 90 banks are meeting with the developers today in an attempt to recover some of the $22bn in debts that it owes.
Dubai’s debt crisis is over, according to the foreign minister of the United Arab Emirates (UAE). Abu Dhabi’s $10 billion bailout of its struggling neighbour was proof of national unity, said Sheikh Abdullah Bin Zayed Al Nahayan.
Shares in the Gulf have soared after news that Dubai has received a $10 billion bail-out from its neighbour Abu Dhabi to tide it over till April 2010. The funds will also be used to repay a Dubai World Islamic debt which matures today and provide a fighting fund while it negotiates a restructuring deal with creditors.
Emirates has helped ease concerns over its financial position by announcing that it has raised $1.13 billion for the delivery of Airbus A380 superjumbos.
Dubai’s stock markets have soared today following news that Emaar was scrapping a merger with three other state-owned real estate groups, in a move that distances it from fears of growing toxic debt within government-owned companies.