Dubai Holding reaches deal with creditors

DUBAI HOLDING, the investment conglomerate owned by the emirate’s ruler, said yesterday that its private equity arm had reached an agreement with creditors to restructure $2.5 billion of debt, ending nearly two years of talks.

Dubai International Capital, which has stakes in British-based budget hotel chain Travelodge and German alumina products maker Almatis, will extend $2.15 billion of outstanding bank loans by five years at an interest rate of 2 per cent.

A further $350 million in loans will be extended for three years, said Dubai Holding, owned by Sheikh Mohammed bin Rashid al-Maktoum.

The debt agreement marks another milestone in Dubai’s effort to rebuild its credibility with investors who fled the region after state-owned conglomerate Dubai World shook markets in 2009 with plans for a $25 billion debt restructuring.

Dubai World had built up the debts during the boom years before the financial crisis. It reached a final deal with creditors in 2010, extending repayment over five to eight years.

Dubai International Capital gave no details on how it planned to repay the debt at maturity but the private equity firm has been selling down assets.

It sold hotel operator Ishraq Dubai to diversified firm Almulla Group in October last year.

It also sold its 45 per cent stake in valve-maker KEF Holdings for $178 million earlier in 2011.

“Although we are under no pressure to sell assets,” chief executive David Smoot said, “we have been able to make a number of profitable exits in recent months demonstrating the quality of our investments and our ability to find buyers in current market conditions.”

Parent Dubai Holding’s portfolio includes brands in the property and hospitality sectors, organised under three main groups: Dubai Holding Commercial Operations Group, DIC and Dubai Group.

Dubai Group is itself in talks to restructure debts of about $10 billion.

“Dubai Holding will continue to focus on reaching a consensual agreement with Dubai Group lenders,” its chief executive, Ahmed Bin Byat, said in the statement. – (Reuters)