Posted on December 10, 2009 at 9:12 PM
Dubai World, a state-backed conglomerate in charge of some of the Middle East’s largest projects, has approximately $60 billion of debt, and on November 25 the Dubai state asked creditors for a six-month pause on the debt payment.
Clifford Chance is acting as the adviser for Dubai World, as they have worked together in the past numerously, with Dubai-based corporate partner Simon Clinton and restructuring partner Robin Abraham leading the team.
Latham is advising the Dubai authorities on this matter, with a team led by local office head Bryant Edwards. Allen & Overy is rumored to be advising some of the banks acting as Dubai World’s senior lenders, but the firm is not confirming its position.
If creditors approve the postponement plans, then the repayment of the $4 billion bond issued by Dubai World subsidiary Nakheel, being advised by DLA Piper, will be delayed till the end of May 2010. Deloitte has been appointed to oversee a potential restricting of the group.
According to press reports, the Dubai government will not guarantee Dubai World’s debts, and it is unclear if Abu Dhabi will help Dubai in this crisis.
Ashurst Middle East managing partner Nick Bryans said, though, that: “The interest in the UK and US press in this matter is not reflected here – quite the opposite. I think in part the strong reaction was based on the manner in which this was announced, just ahead of the holiday. The financial markets were affected but appear to have recovered.
“I have no doubt that the debt issue will be solved and we still see significant signs that things are picking up, with a lot of new opportunities in the Middle East region.”
A Dubai-based partner with a magic circle firm stated: “To us here in Dubai this news was not exactly earth-shattering because postponing the debt repayment was what they were always going to do.”
One London-based magic circle Islamic finance partner commented: “If sanity prevails they’ll find the money and repay the debt, but there is a lot of hysteria and froth at the moment, so we will have to wait.”
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