Dubai Government To Support Business Plan Of Dubai World And NakheelThursday, March 25, 2010
The Dubai Government announced Thursday that it will support Dubai World and Nakheel “with significant financial resources”, according to a statement received by Gulf News. This will include a commitment to fund up to $9.5 billion over the business plan period for both companies, according to the statement. The support will be allocated as $1.5 billion for Dubai World and $8 billion for Nakheel. The support will be funded by the $5.7 billion remaining from the loan which was previously made available from the Government of Abu Dhabi in addition to other “internal Dubai Government resources”, according to the statement. The statement also said that “Dubai World and Nakheel will also present revised business plans, which take into account the current business environment and reflect the new direction being given to both companies.” Dubai World has been in discussions with lenders – which ended yesterday evening - and will present a proposal to all its creditors for the restructuring of their loans.
In this proposal the Government is offering to recapitalize Dubai World through the acquisition of the Government’s $8.9 billion claim and a commitment to fund up to $1.5 billion in new funds, the statement said. In a separate statement, developer Nakheel on Thursday announced a comprehensive recapitalizations plan with following key elements: The Dubai Government will provide approximately $9 billion in financial support. It will provide $8 billion of new money directly to Nakheel and convert its existing $1.2 billion debt claim into equity. All creditors are to receive 100 per cent repayment “on the agreed amount of their claims” over time, Nakheel said. An initial $1.5 billion of the new funds will be made available to Nakheel to fund contractors to continue building near-term development projects. Nakheel said it will work with its creditors over the coming weeks to secure an agreement for the recapitalization plan. Following the announcement, Dubai stocks surged at 4.3 per cent in noon trading with the index standing at 1845.04.Source: Gulf News