Breaking Travel News

Dubai World secures $9.5bn government backing

Dubai World secures $9.5bn government backing

Following months of uncertainty, the Dubai government has confirmed it will offer a financial lifeline to its troubled investment vehicle Dubai World.

Dubai World – which owns travel and tourism assets including Leisurecorp and Istithmar - shocked global financial markets in November 2009 when it asked for a six-month delay on debt repayments.

Following negotiations with the city-state’s government, the troubled company will now offer proposals to investors, allowing the company to restructure $23.5bn of debt.

The deal will also see Dubai World convert $8.9bn of debt into equity.

“This proposal represents the best possible solution for all stakeholders,” Dubai World said in a statement.


“It follows extensive discussions with our creditors, a thorough review of Dubai World’s businesses and significant financial support from the government.”

Dubai World asked for extensions on debt repayments last year, with major global stock markets subsequently questioning the health of the Dubai economy.

The emirate has been hard hit by the slowdown in global property markets, with some investors concerned over Dubai’s ability to repay debts.

Sheikh Ahmad bin Saeed al-Maktoum, chairman of the Dubai Supreme Fiscal Committee, stated the new investment proposals would ensure both Dubai World and property company Nakheel were “key contributors to the strong economic future of the Emirate of Dubai”.

“The government of Dubai, acting through the DFSF, will support these proposals with significant financial resources, including a commitment to fund up to $9.5bn in new funding over the business plan period,” he confirmed.

DP World

The news comes just hours after DP World – the third largest port operator in the world, and key asset of Dubai World – released its financial results.

The marine terminal operator confirmed profits fell by 46 per cent in 2009, amid the continued fallout from the global financial meltdown. However, the company also indicated there were signs of a recovery.

The company’s adjusted net profit from continuing operations fell to $333 million through December 31st, compared to $621 million in the previous 12-month period.

Chief executive officer Mohammed Sharaf commented: “Our 2009 results are an excellent achievement for DP World given the significant reduction in global trade and the uncertainty surrounding the operating environment throughout the year.

“Our stronger second half performance reflects the hard work of our management teams, with higher volumes, improved utilisation rates across the majority of our terminals and better than expected cost reductions.

“Taken together, these led to an improvement in underlying EBITDA margins in the second half, which will provide a solid platform to build on as we go into 2010,” he concluded.