Dubai World talks to start (The National)

Dubai World’s debt problems stem largely from its property subsidiaries. Nakheel, its largest developer, paid off a $3.5bn Islamic bond last week with the help of the Dubai Financial Support Fund (DFSF), a government body set up this year to assist struggling government-owned firms.

 The first job of the meeting will be to name a co-ordinating committee – a “cocom” – to represent the creditors. This is likely to include four British banks – RBS, Lloyds, HSBC and Standard Chartered – which are thought to be owed more than $5bn between them.

According to standard banking practice in financial restructurings, the cocom will charge a fee for the services its executives provide in the course of the negotiations. This fee will be confirmed at today’s meeting. Regional banks are headed by Abu Dhabi Commercial Bank and Emirates NBD.

@Body-NoIndent:Advisers and consultants involved in the restructuring of Dubai World are set for a multimillion-dollar fee. At least nine outside firms, including lawyers, accountants, investment bankers and public relations consultants, will join representatives of Dubai World’s more than 90 creditor banks at a meeting at the city’s trade centre this afternoon to begin work towards an agreement on the standstill in debt repayments that Dubai World requested last month.

@Body:The services of such global financial experts are not cheap. One banker estimated the total bill was likely to be “tens of millions of dollars”.
Dubai World will be represented by its new chief restructuring officer, Aidan Birkett of Deloitte, the global accounting firm.

Also advising Dubai World are Rothschild, the investment bank; AlixPartners, the corporate restructuring group; and Clifford Chance, international lawyers. Communications advice is coming from the public relations firm Financial Dynamics, which declined to comment yesterday.

The meeting is likely to confirm the appointment of the London accounting firm KPMG as adviser to the co-ordinating committee, as well as another investment bank adviser.
It was unclear last night whether the Dubai Government would be represented at the meeting. It is advised by the US investment bank Moelis, which recently assisted Dubai in its dealings with the Las Vegas property developer MGM Mirage.

The Dubai Department of Finance is advised on communications by the British public relations firm Brunswick, which also declined to comment yesterday. Abdulrahman al Saleh, the director of the Department of Finance, recently distanced the Government from any responsibility for the financial obligations of the state-owned conglomerate.
Other parties in the restructuring talks have also taken on lawyers and consultants to press their cases. Allen and Overy, an international law firm, has been hired by a consortium of commercial banks that are owed money by Dubai World.

One banking adviser, who declined to be named, said the priority was to reach a deal on the terms of the standstill because that would allow Dubai Government funds to be used to finance the ongoing operations of Dubai World.

In October, Dubai World announced 12,000 job cuts in its worldwide operations. Further job losses are expected as part of the restructuring.

In talks in London last week, Dubai officials held out the prospect that Dubai World could meet its financial obligations in full, if given sufficient time, and rejected speculation that the conglomerate would be forced into disposing of core assets at distress prices.

So far this year, the DFSF has received, or been pledged, some $26bn from the UAE Central Bank or Abu Dhabi sources. Scores of banks that are owed money by Dubai World will come to today’s meeting with divergent viewpoints on the standstill and restructuring, said a banker in Dubai. No breakdown of the split between bank debt and unpaid contractors’ bills has yet been made public, but this is likely to be provided today. Financial creditors are estimated to account for more than half the total.

Talks were likely to continue after the new year, the banker said, but the expectation was that a quick resolution could be reached because a settlement was in the best interests of all parties.

UAE shares dropped yesterday to the lowest in a week, led by Emirates NBD and National Bank of Abu Dhabi, on concerns about slowing economic growth and fears that the Dubai World debt restructuring would hurt banking earnings.
Emirates NBD fell the most in a week as the country’s largest bank by assets was cut to “sell” at Goldman Sachs Group. The Dubai Financial Market General Index lost 2.6 per cent to close 1,831.41, while the Abu Dhabi Securities Exchange General Index fell 0.9 per cent to 2,749.08.

The National