Dubai World announces deal with creditors
The company, which created a plan-shaped artificial group of islands off the coast of the small emirate, sent shock waves across the financial world last November when it unexpectedly announced that it was seeking new terms on its US$ 59 billion debt. After becoming a giant because of fast-paced economic growth, it found itself without enough cash to cover its following the collapse of real estate prices.
Abu Dhabi, the richest member of the United Arab Emirates (UAE), came to rescue of its smaller neighbour with US$ 10 billion in aid, plus another 10 provided by the UAE central bank.
"This agreement formalizes a strong consensus around a fair and balanced restructuring proposal and is a key step towards putting Dubai World on a sound and stable financial footing whilst enabling it to realize the full potential of its underlying businesses," said Sheik Ahmed bin Saeed al-Maktoum, chairman of Dubai's Supreme Fiscal Committee, said in a statement released today.
The deal, which involves 73 creditor banks, offers repayment of the outstanding loans in two stages; one in five years, the other in eight at a starting interest of 1 per cent.