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Dubai World: the proposal

Dubai World: the proposal

Big debts, but big assets, too. As the repayment proposals of embattled Dubai World are made public, we take a look at the key points. Anyone want to buy Atlantis?

August 26, 2010 1:06 by



Dubai World plans to sell its prized assets over a period of eight years to generate as much as $19.4 billion to pay off creditors burned by its overambitious expansion, according to a restructuring document obtained by Reuters on Wednesday.

The company’s plan involves repayment over five to eight years, with interest of between 1 percent to 3.5 percent.

Creditors have been told the company is in need of “urgent” restructuring as it seeks agreement on the multi-billion dollar plan. In the final restructuring proposal, presented to creditors on July 22, the company outlined plans to dispose of its “investment assets”, including its stakes in luxury retailer Barney’s, Dubai-based Atlantis Hotel, a lavish pink palace perched at the seaward tip of its island development and casino operator MGM Resorts International, over a period of five years.

It has identified ports operator DP World, Jebel Ali Free Zone and Dubai Maritime City (DMC) and Dry Docks World as its “strategic assets” which may generate up to $11.8 billion when put on sale over a period of eight years.

The following are the key new elements of its debt proposal:

FACTS AND FIGURES

  • Total Dubai World debt: $39.9 billion
  • Of this, Dubai World debt is $15.2 billion and subsidiary debt is $24.7 billion as of December 31 2009.
  • DP World, one of Dubai World’s most profitable subsidiaries, has total debt of $8 billion.
  • Total Dubai World creditor claims: $24.8 billion. Of this $14.4 billion is bank debt and $9.4 billion is government and Nakheel claims.

ASSET REALISATION PLAN

  • Dubai World present asset values between $6.4 billion and $10.4 billion.
  • Projected future asset values over 5-8 year horizon between $15.1 billion and $19.4 billion.
  • Dubai World investment arm Istithmar portfolio assets expected to generate $3.2 billion to $4.5 billion in net disposal proceeds over next 5 years.
  • Possible sale of strategic assets such as DP World and Jebel Ali Free Zone to underpin payment of maturities due after 8 years.


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