The latest deferment pushes the deadline back to December 30, when the rolling credit facility will be converted into a long-term loan, a spokesman says.
Dubai Holding in $555m loan extension
The property and hospitality arm of Dubai Holding has received a one-month extension on a US$555 million (Dh2.03 billion) loan to give it more time to rearrange its finances.
It is the third time Dubai Holding Commercial Operations Group (DHCOG) has received a deadline extension on the loan.
The latest deferment pushes the deadline back to December 30, when the rolling credit facility will be converted into a long-term loan, said a spokesman for DHCOG.
"The extension is required to finalise a new long-term facility," the spokesman said.
DHCOG was hit by a sharp decline in the emirate's property market in which prices in some segments fell by more than 50 per cent from their peaks in 2008.
DHCOG is not the only struggling division of Dubai Holding, the diversified conglomerate owned by Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai.
Dubai International Capital, the private-equity arm of Dubai Holding, was expected to seek a fresh extension on the repayment of a $1.25bn loan when a debt restructuring deadline expired on Tuesday.
The emirate's state-owned companies are trying to refinance debt amid sluggish credit markets after the value of international investments declined amid the global financial crisis.
DHCOG was granted a two-month extension on its latest loan in July and then received more time until November 30.
Sheikh Ahmed bin Saeed Al Maktoum, the chairman of the Dubai Supreme Fiscal Committee, said on Sunday he was optimistic that Dubai Holding's debt problems would be resolved soon. Well-performing assets such as the hotel operator Jumeirah Group and the economic free-zone operator TECOM Investments would help the process, he said.
Attention has turned to Dubai Holding after the state-controlled conglomerate Dubai World struck an agreement with creditors in October to restructure $24.9bn of debt.
The emirate had a total debt the IMF estimated at $109bn after a credit-fuelled boom unravelled during the global financial crisis.
Nonetheless, the emirate received praise yesterday for its handling of the debt issues. Dubai was taking the right approach by restructuring its debts to avoid the risk of defaults, said Willem Buiter, the chief economist of Citigroup.
"It means the problems are being addressed and recognised," he said on the sidelines of the World Economic Forumsummit on the Global Agenda in Dubai yesterday.
"I wish Europe would follow suit in its banking and sovereign [issues] and recognise what's become unsustainable, take the hit, distribute the pain and launch on a new path of productive activity rather than have the debt overhang act as a long-term growth depressant."
Countries of the euro zone are struggling to contain a sovereign debt crisis that is threatening to spread to Portugal, Spain and Italy. Ireland secured an €85bn (Dh409.77bn) aid commitment from the EU and the IMF last week.