Dubai ruler's company confirms deal with creditors

Published April 5, 2012 11:09AM (EDT)

DUBAI, United Arab Emirates (AP) — Creditors of Dubai International Capital, an investment company controlled by the emirate's ruler, have agreed to adjust the terms on $2.5 billion worth of debt, the firm's parent said Thursday.

The deal is the latest sign Dubai is making headway on efforts to get its finances in order following the 2009 debt ordeal involving state conglomerate Dubai World.

DIC's parent company, Dubai Holding, said lenders agreed to extend for five years the repayment of $2.15 billion in exchange for 2 percent interest. They are also extending for three years the existing interest terms on a separate $350 million in debt.

The debt restructuring puts DIC on "sound financial footing," Dubai Holding CEO Ahmed Bin Byat said. It ends more than a year of negotiations with creditors, and solidifies a preliminary agreement DIC secured with them in late November.

DIC's holdings include stakes in British hotel chain Travelodge Group and precision engineering company Doncasters Group.

It has raised cash by unloading several assets over the past couple of years. It agreed in March 2011 to sell its stake in steel product manufacturer KEF Holdings to Tyco International for $178 million.

David Smoot, DIC's chief executive, said the company is under no pressure to sell additional holdings.

"The portfolio is well-positioned to navigate current markets with less leverage, better liquidity and long-term financing, reflecting significant future value potential," he said in a statement.

DIC's parent Dubai Holding is controlled by Dubai ruler Sheik Mohammed bin Rashid Al Maktoum. Another part of Dubai Holding last month said it is putting New York's Essex House hotel up for sale.

Government conglomerate Dubai World, another state-linked company in the emirate, sent markets reeling in 2009 when it acknowledged it couldn't pay back billions it owed. It signed an agreement to restructure some $25 billion in debt last March.

The emirate and its state-linked companies together owe lenders at least $101.5 billion, credit rating firm Moody's Investors Service estimated in December.

By Salon Staff

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