Dubai sends message with Dubai World reshuffle
Dubai World board change seen as signal of serious intent; New directors are close to Dubai ruler Sheikh Mohammed; Dubai distanced itself from Dubai World debt last year.
December 15, 2010 11:16 by Reuters
The appointments implicitly guarantee the state-linked entity, which shocked global markets in November 2009 when it asked to delay debt payments, triggering layoffs and credit downgrades. It relied on $10 billion in aid from neighbouring emirate Abu Dhabi to get through the worst of the crisis.
“The appointment of this group of people who work well together reflects trust in the way they handled business so far,” said one analyst who did not wish to be named. “It shows some maturity and learning from past mistakes or shortfalls.”
The conglomerate, whose assets range from high-profile names in its stable such as DP World, luxury retailer Barneys New York and Scotland’s Turnberry golf course, sealed a restructuring deal with investors last month which includes a plan to sell prized assets over eight years to generate the funds to pay off creditors.
The plan includes new management and the presence of such senior figures could help assuage lender concerns about how the firm is being run while they wait for their money.
Analysts say one concern they have is that with these appointments the inner circle of people attempting to reestablish Dubai’s reputation has just got smaller still.
“I think these guys are being overstretched,” said a source who was involved with the Dubai World restructuring. “You will end up with the same names all over the place, which is dangerous as it can end in them having a monopoly on power.”
State-linked firms such as Dubai World and property arm Nakheel have long been criticized for management inertia caused by the inability of executives to make key decisions without getting sanction from higher up.
“A small number of trusted Emiratis are controlling such an extensive set of businesses, they simply don’t have sufficient time to do justice by each business,” said Khuram Maqsood, a former investment director at Dubai-based investment company.
(By Amran Abocar. Additional reporting by Raissa Kasolowsky; Editing by Samia Nakhoul)