x Abu Dhabi, UAEWednesday 24 January 2018

Dubai World in talks on Nakheel sukuk and asset sale

Dubai World is in talks with bankers over a restructuring of part of its debt obligations that could include asset sales.

Dubai World is in talks with bankers aimed at accelerating the restructuring process announced last week by "considering alternatives in respect of debt obligations of certain entities within the group". The move suggests Dubai World is unlikely to meet its obligation to bondholders of the $4 billion (Dh14.69bn) Nakheel sukuk payable on December 14, and that asset disposals are likely from the two property businesses involved, Nakheel and Limitless. In a statement released early on Tuesday morning UAE time, Dubai World said the proposed restructuring process would relate only to Dubai World and certain of its subsidiaries, including Nakheel World and Limitless World.

"The process will not include Infinity World, Istithmar World, and Ports and Free Zones World (which includes DP World, Economic Zones World, P&O Ferries and Jebel Ali Free Zone)," the company said. It added: "The total value of debt carried by the companies subject to the restructuring process amounts to approximately $26bn, of which approximately $6bn relates to the Nakheel sukuk." Another $2bn of the Nakheel sukuk falls due early next year. Dubai World said the decision had been taken "following a detailed review of the group's liquidity and capital structure".

"It is envisaged the restructuring process will be carried out in an equitable way for the overall benefit of all stakeholders and will comprise several phases including: long term plans and commitment of stakeholders; determination of maintainable profit and cash generation; assessment of deleveraging options, including asset sales; assessment of funding requirements and the formulation of restructuring proposals to financial creditors and their implementation. "Initial discussions have commenced with the banks of Dubai World and are proceeding on a constructive basis. In light of the current operational challenges and the future obligations of the group, it is anticipated that the process and any related actions to address strategic alternatives will be conducted on an expedited basis. "As part of this overall process, Nakheel requests its sukuk holders to appoint an authorised representative with whom discussions can commence."

Dubai World has appointed the New York-based Moelis & Company, a specialist investment advisory and asset management group, to work alongside its long-term adviser, Rothschilds. Last week, Aidan Birkett of the UK-based accounting firm Deloitte, was appointed chief restructuring officer of Dubai World, reporting to the emirate's Department of Finance. Nakheel is the developer of the Palm Jumeirah and The World in Dubai, while Limitless projects include the Downtown Jebel Ali development.