By Polya Lesova www.marketwatch.com
FRANKFURT (MarketWatch) — Dubai’s government said Thursday it will commit $9.5 billion in new funding to help conglomerate Dubai World restructure its debt.
This will be funded by the $5.7 billion remaining from the loan previously made available from the government of Abu Dhabi and from internal Dubai government resources. Dubai World is trying to restructure $23.5 billion in debt. In a statement on Thursday, Dubai World presented its restructuring plan, which includes converting $8.9 billion of debt and claims into equity and injecting $1.5 billion in cash into the firm to fund its working capital and interest payment commitments.
Two tranches of new debt with five and eight-year maturities will also be issued as part of the proposed restructuring. Dubai World’s creditors will now have to decide whether they agree to the proposed terms. A separate proposal was presented for restructuring the debt of Nakheel, the real-estate subsidiary of Dubai World. Under this proposal, Dubai’s government will provide approximately $8 billion of new money directly to Nakheel to fund operations and settle liabilities.
In addition, the government has proposed to convert its existing $1.2 billion debt claim in Nakheel into equity. “The plan enables Nakheel to offer creditors 100% of agreed amounts owed and to fulfill its obligations to customers through the prompt completion of near-term projects,” the firm said in a statement.