Lord Mandelson, the UK business secretary, said yesterday that Dubai World must quickly conclude a deal with its creditors. "Dubai has to be conscious of the fact that how it resolves its current problems and how it deals with its creditors will mean a great deal to the Dubai brand, its reputation and how it secures investment from overseas in the future," he told a gathering of British business leaders in the emirate.
Lord Mandelson's comments are likely to increase pressure on the Dubai Government to more swiftly conclude the restructuring announced late last year, including a proposed standstill on US$22 billion (Dh80.8bn) of debt. He is the second high-ranking UK official to visit in the past week. Nick Anstee, the Lord Mayor of the City of London, spent time in the emirate last week. "The current uncertainty on a lack of agreement cannot go on indefinitely, even for much longer," said Lord Mandelson.
"Therefore, it [Dubai] has to tread carefully, it has to tread openly, it mustn't tread for too long and it does need to reach an agreement with its creditors that everyone can say is demonstrably fair to those who have invested their money, undertaken jobs, done well for Dubai and require Dubai to act fairly to them," he continued. Lord Mandelson made his remarks as the Dubai Financial Market suffered its largest drop in three weeks after investors reacted to a report from Zawya Dow Jones that the company may offer creditors 60 cents in the dollar after seven years.
A spokeswoman for the Dubai Financial Support Fund - which has channelled at least $6.5bn to Dubai World from the $20bn in rescue funds provided so far to Dubai by the UAE and Abu Dhabi - said the negotiations between Dubai World and its banks were confidential and that fund officials could not comment. A banker who sits on the steering committee of Dubai World's largest lenders yesterday told The National that no offer had yet been made to creditors. "Nothing whatsoever has been decided yet. There is no mention of 'haircuts'. Nothing like that has been discussed. It is all still about structures and amounts," said the banker, who did not want to be named because the talks were confidential.
Lord Mandelson yesterday urged transparency in the ongoing negotiations between the Dubai World conglomerate and its creditor banks. "As we approach decisions, Dubai has to be as open in providing information, in engaging creditors, be it banks or construction companies." UK companies are among the largest international creditors to Dubai World, with banks from the UK known to form the single largest group by country of origin exposed to the conglomerate.
Dubai World's property units have also embarked on a fresh round of job cuts, it emerged yesterday. Nakheel, the developer of Dubai's Palm islands, and Limitless, a sister company that once planned to build a Panama Canal-sized waterway through the emirate, have cut more jobs as their parent company seeks to agree a debt standstill with its creditors. Limitless has shed about 55 jobs, or about 20 per cent of its workforce. It currently has 220 employees, down from a high of 500, according to former employees.
"Limitless has reorganised and streamlined its operations as part of its ongoing strategy to reduce costs while continuing to maximise productivity," a spokeswoman said. "Regrettably, this has impacted jobs." Nakheel said it "continues to readjust its current business objectives and the resources to match as part of the restructuring process". The company reduced its staff numbers significantly last year in several rounds of lay-offs. It had 3,500 employees at its peak.