Barbara Surk
Indebted Dubai World rejected asset sale
Report provides insight into a debt crisis that threatens Dubai Inc.
Dubai World “totally rejected” the possibility of selling off some of its top performing assets in the months before the heavily indebted conglomerate turned to creditors with a plea to defer payments on some of the $60 billion it owes, a newspaper reported Sunday.
The company, whose holdings range from ports to real estate, shocked world markets on Wednesday with an announcement that it would seek, until at least May, a deferment on its debts and those of its real estate arm, Nakheel PJSC. That subsidiary has a $3.5 billion bond coming due next month.
The announcement was the clearest indication yet that the conglomerate, which has been a primary engine behind Dubai’s meteoric growth over the past decade, was in way over its head in terms of debts. The company’s obligations alone account for the overwhelming majority of the at least $80 billion Dubai owes to creditors.
Dubai World “totally rejected the idea of selling some of its good investment and real estate assets at low prices,” a company official was quoted as saying by Al-Itihad newspaper on Sunday.
The official said that any asset sale needed to be in a “commercially fair manner in order to achieve (Dubai World’s) long-term strategic objectives, away from … economic pressures.”
The statement in the newspaper adds little in the way of explanation as to how company officials, and indeed Dubai’s ruling family, planned to tackle a debt crisis that could destroy the reputation of Dubai Inc., as the city-state’s government-affiliated businesses are known.
Dubai officials have headed down to neighboring Abu Dhabi, ostensibly to discuss the debt issues, and expectations are that the United Arab Emirates’ central bank will issue some sort of statement on Monday.
The company had said last week that it was seeking the delay as it continued its restructuring — a plan under which it has already laid off 15 percent of its work force in a bid to streamline costs.
The opaque wording of the company’s announcement for a payment extension was amplified by its timing — coming on the eve of a three-day Islamic holiday in which markets in the region would be closed and officials largely unavailable.
The news was a blow to the reputation of Dubai, once seen as the Gulf Arab region’s answer to Las Vegas, Wall Street and Los Angeles rolled in one.
With little oil, the emirate — one of seven semiautonomous city-states making up the UAE — focused its growth efforts on finance, tourism and real estate. It bankrolled that dream, which included indoor ski-slopes, man-made islands and the world’s tallest tower, on cheap credit and borrowed time.
A sale of the company’s assets is one possibility being floated by analysts to cover the debts. But the more likely scenario being discussed is that Abu Dhabi will engineer another bailout — even partial — in a bid to minimize damage to the country’s bank and the economy.
Several UAE banks are on review by international credit agencies for their exposure to Dubai World’s debts.
The announcement came in tandem with another from Dubai’s government that two banks majority owned by neighboring Abu Dhabi — the oil-rich home to the United Arab Emirates’ federal government — had fully subscribed a $5 billion bond issuance.
That issuance was part of a broader $20 billion bond program launched earlier this year to help Dubai meet its mounting debts. The UAE’s central bank had already bought $10 billion in bonds, but officials were quick to say that the latest issuance was not linked to Dubai World’s problems.
Formula One becomes part of Bahrain power struggle
A Bahraini carrying a child passes a wall Thursday, April 5, 2012, in Barbar, Bahrain, west of the capital of Manama, that is painted with graffiti depicting Bahrain's King Hamad bin Isa Al Khalifa in a race car, calling for a boycott of this year's Formula One Bahrain grand prix, scheduled for April 22. The Arabic is a signature reading "free men of Barbar." A year after an anti-government uprising forced Bahrain's rulers to cancel the kingdom's coveted Formula One race, the grand prix is again smack in the middle of a power struggle. (AP Photo/Hasan Jamali)(Credit: AP) MANAMA, Bahrain (AP) — A year after an anti-government revolt forced Bahrain’s rulers to cancel the kingdom’s coveted Formula One race, the grand prix is again smack in the middle of a power struggle.
Protesters aiming to break the Sunni regime’s grip on power have stepped up their campaign against the event — holding rallies across the island, plastering anti-Formula One posters on walls and criticizing the F1 chief and race drivers on social media websites.
The country’s leadership is determined to stage the April 22 race as it seeks to show signs of stability nearly 14 months after the country’s Shiite majority began a sustained uprising seeking a greater voice in the kingdom’s affairs of the kingdom, which is home to the U.S. Navy’s 5th Fleet.
Continue Reading CloseRights group urges Bahrain to free hunger striker
A Bahraini anti-government protester raises a picture of jailed opposition human rights activist Abdulhadi al-Khawaja, on his 49th day of a hunger strike, during a demonstration Thursday, March 29, 2012, outside U.N. offices in Manama, Bahrain. Opposition societies organized Thursday's protest against security forces use of tear gas, which rights activists blame for about 30 deaths. Earlier this month, the U.N. human rights office in Geneva expressed its concern about the use of tear gas, citing "worrying reports of the disproportionate use of force by Bahraini security forces." (AP Photo/Hasan Jamali)(Credit: AP) DUBAI, United Arab Emirates (AP) — Amnesty International on Friday urged Bahrain to free a leading human rights activist who is on a hunger strike and reminded the Gulf kingdom’s rulers to fulfill promises to release all those jailed for speaking out during the country’s uprising.
The rights group said Abdulhadi al-Khawaja should be released immediately because of fears the “activist is at risk of death” after more than 50 days on a hunger strike. Al-Khawaja has been refusing food since Feb. 8.
Continue Reading CloseGroup calls for protection for UAE museum workers
DUBAI, United Arab Emirates (AP) — Human Rights Watch on Wednesday urged Emirati development companies and Western cultural institutions building branches of the Louvre and the Guggenheim in the United Arab Emirates to do more to curtail abuses of Asian migrant workers involved in the landmark multibillion dollar project.
The New York-based group said that although those behind the museum projects in Abu Dhabi have made important commitments, “protection gaps remain,” such as a failure to reimburse workers for recruiting fees, which often take months or years to repay.
Continue Reading CloseBahrain’s crackdown on demonstrations kills 5 protesters
The American-allied government's reaction becomes increasingly violent as some citizens are shot point blank
Shiite Bahraini youths burn tires Wednesday, March 16, 2011, near a shopping mall in Malkiya, Bahrain as they awaited government forces they anticipated would roll into their Shiite Muslim village southwest of the capital of Manama. They said they tried to get to Manama to join anti-government protesters under attack there but found all ways in to the capital closed. (AP Photo/Hasan Jamali)(Credit: AP) Soldiers and riot police expelled hundreds of protesters from a landmark square in Bahrain’s capital on Wednesday, using tear gas and armored vehicles to try to subdue the growing movement challenging the 200-year-old monarchy. At least five people were killed as clashes flared across the kingdom, according to witnesses and officials.
The unrest that began last month has increasingly showed signs of a sectarian showdown: The country’s Sunni leaders are desperate to hold power, and majority Shiites are calling for an end to their dynasty. A Saudi-led force from Gulf allies, fearful for their own regimes and worried about Shiite Iran’s growing influence, has grown to more than 1,000 soldiers.
Continue Reading CloseBahrain military sweeps into protest camp
At least six are dead in military raid day after state of emergency declared
Thousands of anti-government protesters march Tuesday, March 15, 2011, to the Saudi embassy in Manama, Bahrain. Bahrain's king declared a three-month state of emergency Tuesday to quell a Shiite uprising, as clashes spread through the capital and surrounding villages in a showdown that drew in the region's major powers and splintered along its main sectarian faultlines. At least two Bahrainis and a Saudi soldier died, and hundreds of protesters were injured by shotgun blasts and clubs. (AP Photo/Hasan Jamali)(Credit: AP) Soldiers and riot police used tear gas and armored vehicles Wednesday to drive out hundreds of anti-government protesters occupying a landmark square in Bahrain’s capital, a day after emergency rule was imposed in the violence-wracked Gulf kingdom. At least six people were killed, according to witnesses and officials.
The full-scale assault launched at daybreak swept into Pearl Square, which has been the center of uprising against Bahrain’s rulers since it began more than a month ago. Stinging clouds of tear gas filled streets and black smoke rose from the square from the protesters’ tents set ablaze.
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