Tags: Dubai | 2 Billion | Ruler | Conglomerate

Dubai Pumps $2 Billion into Ruler's Conglomerate

Tuesday, 16 Nov 2010 07:31 AM

Dubai is spearheading the restructuring of a conglomerate controlled by the emirate's ruler and has already pumped $2 billion into the debt-laden company, a senior official disclosed in comments published Tuesday.

Dubai Holding's debt concerns have been known for some time. What is new is the extent of the government's involvement in the overhaul, which will likely affect the balance sheets of its international lenders.

Details of the aid came as government offices and many regional businesses remained closed until next week because of a religious holiday. Dubai shocked global markets over the same holiday break a year ago when it unexpectedly revealed severe debt problems at another state-linked firm, Dubai World.

Mohammed al-Shaibani, a close aide to Dubai's ruler, provided details of the Dubai Holding aid in an interview with the Financial Times published Tuesday.

He said the government has injected "somewhere in the range of $2 billion" into the company and was prepared to do more.

"I don't want to put any money in it as the government, but I will do it as and when it's required," he told the paper.

He indicated Dubai Holding's lenders, many of them the same banks that lent to Dubai World, would need to take a financial hit as part of the restructuring.

"Everybody has to contribute, keeping in mind the long-term relationship," he said.

Al-Shaibani is director of the Dubai Ruler's Court, the seat of executive power in the emirate. He also sits on a fiscal committee of the ruler's top lieutenants that is responsible for tackling Dubai's debt problems and was involved in the $24.9 billion restructuring of Dubai World.

Unlike that conglomerate, which is owned by the sheikdom's government, Dubai Holding is controlled directly by Dubai's hereditary ruler himself, Sheik Mohammed bin Rashid Al Maktoum.

Its financial problems are not as severe as Dubai World's. The International Monetary Fund estimated earlier this year that Dubai Holding is shouldering $14.8 billion in publicly held debt.

A spokeswoman who has represented Dubai's Finance Department and issues relating to Dubai World's overhaul said she had nothing to add to the published comments. Dubai's media office was not immediately able to provide further details.

Dubai Holding didn't respond to a request for comment.

The conglomerate controls businesses ranging from office parks and luxury hotels in Dubai to stakes in medical imaging firm Alliance Medical and British hotel chain Travelodge Group.

One of its divisions, Dubai Group, last week said it had entered into talks with lenders about how to pay its debts. It has a $1.5 billion Islamic loan coming due next year.

Other parts of the conglomerate have been locked in separate negotiations for months about restructuring and extending the terms of other near-term loans worth about $1.8 billion.

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Dubai is spearheading the restructuring of a conglomerate controlled by the emirate's ruler and has already pumped $2 billion into the debt-laden company, a senior official disclosed in comments published Tuesday. Dubai Holding's debt concerns have been known for some...
Dubai,2 Billion,Ruler,Conglomerate
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2010-31-16
 

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