Dubai is planning a multibillion-dollar injection of cash into its indebted conglomerate Dubai World, in a move intended to spark economic recovery in the emirate.
The package was unveiled yesterday as part of proposals for restructuring Dubai World's US$23.5 billion (Dh86.31bn) of debt, owed to 97 international and regional banks and thousands of contractors and customers of Nakheel, the property developer behind the Palm and The World projects.
The proposals were positively received by investors across the world, but especially in the Middle East. All the key indicators improved, with UAE markets showing gains and other measures of financial health improving.
Sheikh Ahmed bin Saeed Al Maktoum, the chairman of the Dubai Supreme Fiscal Committee, said the Government would put $9.5bn of new money into Dubai World.
About $5.7bn would come from the loan already made by the Government of Abu Dhabi, with $3.8bn from its own resources.
Sheikh Ahmed also announced that the Government would convert $10bn of its loans in Dubai World and Nakheel into shares, effectively stepping aside to give other creditors priority in the restructuring talks.
The proposals, which have to be agreed with creditors in talks that could last months, could be a boost to the Dubai economy.
Aidan Birkett, the British financier leading the Dubai World restructuring, said: "If you fix Nakheel, you fix the real-estate sector, and you go a long way to fixing the Dubai economy."
Customers who have bought Nakheel properties are likely to welcome the proposals. The new cash will be used to complete near-term projects and accelerate completion and handover dates.
Customers will be given the option of receiving credit equal to the full value of their instalment payments and swap into projects nearing completion at current market values. Those who have invested in longer-term projects who do not want to take up that option will be offered revised repayment schedules or five-year credit deals.
Contractors owed Dh500,000 or less will receive their payment in full, while those owed more will have the opportunity to receive 40 per cent of the value in cash and the balance in a tradable bond.
Reaction among big banking creditors, with whom Dubai World now has to negotiate the details, was more cautious. One, speaking anonymously, said the proposals were short on detail, and major creditors might have to forgo future interest revenue under the new terms. They are being asked to change existing arrangements to new loan periods of five or eight years.
fkane@thenational.ae
The specs
Engine: 0.8-litre four cylinder
Power: 70bhp
Torque: 66Nm
Transmission: four-speed manual
Price: $1,075 new in 1967, now valued at $40,000
On sale: Models from 1966 to 1970
Test
Director: S Sashikanth
Cast: Nayanthara, Siddharth, Meera Jasmine, R Madhavan
Star rating: 2/5
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
When is VAR used?
• Goals
• Penalty decisions
• Direct red-card incidents
• Mistaken identity
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NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
Country-size land deals
US interest in purchasing territory is not as outlandish as it sounds. Here's a look at some big land transactions between nations:
Louisiana Purchase
If Donald Trump is one who aims to broker "a deal of the century", then this was the "deal of the 19th Century". In 1803, the US nearly doubled in size when it bought 2,140,000 square kilometres from France for $15 million.
Florida Purchase Treaty
The US courted Spain for Florida for years. Spain eventually realised its burden in holding on to the territory and in 1819 effectively ceded it to America in a wider border treaty.
Alaska purchase
America's spending spree continued in 1867 when it acquired 1,518,800 km2 of Alaskan land from Russia for $7.2m. Critics panned the government for buying "useless land".
The Philippines
At the end of the Spanish-American War, a provision in the 1898 Treaty of Paris saw Spain surrender the Philippines for a payment of $20 million.
US Virgin Islands
It's not like a US president has never reached a deal with Denmark before. In 1917 the US purchased the Danish West Indies for $25m and renamed them the US Virgin Islands.
Gwadar
The most recent sovereign land purchase was in 1958 when Pakistan bought the southwestern port of Gwadar from Oman for 5.5bn Pakistan rupees.
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
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