x Abu Dhabi, UAEFriday 28 July 2017

Unit's restructuring shifts focus to Dubai Holding

Bankers are optimistic that a full-scale restructuring of the $10bn debts of Dubai Holding could be imminent following the settlement of a legal action against a unit of the conglomerate.

Restructuring talks have been going on for the past two years, after Dubai Group missed payments on loans in 2010. Sarah Dea / The National
Restructuring talks have been going on for the past two years, after Dubai Group missed payments on loans in 2010. Sarah Dea / The National

Bankers are optimistic that a full-scale restructuring of the US$10 billion (Dh36.72bn) debts of Dubai Group could be imminent following the settlement of a legal action against a unit of the conglomerate.

Royal Bank of Scotland and three other international banks have agreed terms to restructure debts of Dubai Group, the financial arm of the holding company, that would involve their dropping a controversial legal action against the Dubai company.

One banker said: "It was essential to remove this obstacle before we could proceed to consider the wider picture. Now common sense has prevailed on this legal issue, serious talks can begin on the bigger figure."

He spoke anonymously because his bank is involved in the restructuring negotiations.

Dubai Holding, the parent company of the financial investment unit Dubai Group, has agreed to pay back lenders at 18.5 cents in the dollar and to assume responsibility for their debts.

The deal could be part of a wider agreement among some 35 other banks owed about $1.5bn by Dubai Group, which have been offered the same terms, according to banking sources.

Neither the banks nor Dubai Group would comment officially on the possible deal. RBS, Germany's Commerzbank and Standard Bank of South Africa began legal arbitration against Dubai Group in London last year, in a rare case of legal action against a Dubai government-related entity. They were later joined by Commercial International Bank of Egypt in the action.

If the deal proceeds - it is still subject to agreement by other creditors to Dubai Group - analysts believe it could help unlock a resolution to some $10bn of Dubai Holding debt. Restructuring talks about this have been going on for the past two years, after Dubai Group missed payments on loans in 2010.

Meanwhile, a report yesterday said that Amlak Finance, the Islamic mortgage company part-owned by Emaar Properties, is in talks with creditors to restructure about $2bn.

The company, whose shares have been suspended since November 2008, is negotiating with a committee of five banks representing creditors, bankers told Bloomberg News, declining to be identified because the matter is private. PricewaterhouseCoopers is advising Amlak on the talks, according to the people.

Emirates NBD, the UAE's largest bank by assets, is chairing the coordinating committee, they said.

Standard Chartered, National Bank of Abu Dhabi and Dubai Islamic Bank are the remaining members, they said.

 

* with agencies

fkane@thenational.ae