Concerns over Dubai’s financial position have resurfaced after its largest private equity company, Dubai International Capital, requested a three-month extension to its debt repayments, in the latest blow to the emirate’s financial image.
DIC, which is the investment arm of Dubai Holding, a conglomerate owned by the ruler, Sheikh Mohammed bin Rasid al Maktoum, announced it has secured agreement with its six lending banks to delay the repayment of the debt from June until September.
The company said in a statement: “The extension period would allow the implementation of a consensual longer-term plan that would enable DIC to maximise the value of its business for the benefit of all its stakeholders.”
The banks are co-chaired by HSBC and Emirates NBD, and represented by Deloitte whilst Lazard was acting for DIC. The company has agreed to continue to pay interest and amortisation to keep the loans current, a DIC spokesman said.
The delay will stoke market uncertainty about the health of Dubai’s finances, just as the emirate seemed to be getting back on track. This month, Dubai World, the state-owned conglomerate that sparked last year’s recent debt crisis in the emirate, reached agreement with its main banks to restructure $23.5 billion of debts over eight years. It is also seeking a final deal with all its creditors by end June.
Government-related companies must restructure an overall debt burden of $109 billion.
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