Dubai International Capital (DIC), an investment unit of Dubai Holding, has reached an agreement with creditors on the terms of a US$2.4 billion (Dh8.81bn) debt restructuring.
The deal paves the way for the firm to make the necessary asset sales to put itself on a solid financial footing.
Creditors will receive 2 per cent interest on about $2bn of loans and will extend maturities to five years, according to a source familiar with the deal. A further $400 million in loans will have their maturities extended for three years at existing rates, the source said. The terms come into effect in the middle of next month.
"I can confirm that the restructuring has been agreed," a DIC spokesman said.
DIC is part of Dubai Holding, a conglomerate owned by Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai, and has been negotiating with creditors to reschedule its debts since the global recession hit.
The firm was one of the leading private equity vehicles owned by the emirate before the credit crisis knocked its finances out of kilter.
It has interests extending from Alliance Medical, a medical imaging firm based in the UK, to the British hotel group Travelodge.
HSBC Holdings, Emirates NBD, Royal Bank of Scotland Group, Lloyds Banking Group, Mashreq and Noor Islamic Bank were part of a committee negotiating with DIC on behalf of about 20 lenders, Bloomberg News reported.
DIC has already begun the process of asset disposals.
Oger Telecom was sold in August and an affiliate of DIC in June raised $144m from the sale of a stake in Central Electricity Generating, a Jordanian utility.
In May DIC sold its minority stake in Landis+Gyr to Toshiba, which paid a total of $2.3bn for the Swiss smart-electronic grid maker.
In March, DIC announced the sale of its 45 per cent stake in KEF Holdings, a UAE manufacturer of valves and steel castings, to Tyco International for $178m.
The approval of the restructuring represents another milestone in Dubai's efforts to put its finances on a sustainable path.
A deal to restructure $24.9bn owed by Dubai World received final approval in June.
Dubai Group, also owned by Dubai Holding, is restructuring another $10bn of debt.