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BabyDoll · Mar 25, 2010

The support will be allocated as $1.5 billion for Dubai World and $8 billion for Nakheel

* Gulf News Report
* Published: 10:29 March 25, 2010
Dubai: The Dubai Government announced Thursday that it will support Dubai World and Nakheel “with significant financial resources”, according to a statement received by Gulf News.

This will include a commitment to fund up to $9.5 billion over the business plan period for both companies, according to the statement. The support will be allocated as $1.5 billion for Dubai World and $8 billion for Nakheel.

The support will be funded by the $5.7 billion remaining from the loan which was previously made available from the Government of Abu Dhabi in addition to other “internal Dubai Government resources”, according to the statement.

The statement also said that “Dubai World and Nakheel will also present revised business plans, which take into account the current business environment and reflect the new direction being given to both companies.”

Dubai World has been in discussions with lenders – which ended yesterday evening - and will present a proposal to all its creditors for the restructuring of their loans.

In this proposal the Government is offering to recapitalise Dubai World through the acquisition of the Government’s $8.9 billion claim and a commitment to fund up to $1.5 billion in new funds, the statement said.

In a separate statement, developer Nakheel on Thursday announced a comprehensive recapitalisation plan with following key elements:

The Dubai Government will provide approximately $9 billion in financial support. It will provide $8 billion of new money directly to Nakheel and convert its existing $1.2 billion debt claim into equity.

All creditors are to receive 100 per cent repayment “on the agreed amount of their claims” over time, Nakheel said.

An initial $1.5 billion of the new funds will be made available to Nakheel to fund contractors to continue building near term development projects.

Nakheel said it will work with its creditors over the coming weeks to secure an agreement for the recapitalisation plan.

Following the announcement, Dubai stocks surged at 4.3 per cent in noon trading with the index standing at 1845.04.

RobbyG · Mar 25, 2010

Throwing good money after bad money!

viking-warrior · Mar 25, 2010

RobbyG wrote:Throwing good money after bad money!

I am working throught the proposal now, and am having difficulty finding what money they are actually going to throw. The detailed documents read like a 13th secret code book, written by monks from some weird alien cult faith.

As far as I can devine thus far (am about 46% of the way through) the money to which you refer as being thrown, has already BEEN thrown, and it is proposed that that investment will be converted from debt to equity - thus Dubai will become a shareholder not creditor of DW.

The missing bit as far as I am concerned is the lack of a fungible guarantee (i.e. Federal or Abu Dhabi) as we do not rate Dubai as either a sovereign or equivalent credit. Not saying this is a deal breaker, but ...

will report in later

RobbyG · Mar 25, 2010

Is the proposal downloadable? Or are you working for one of the debt holders of DW?

viking-warrior · Mar 25, 2010

The latter. I have no idea if it is in general distibution.

shafique · Mar 25, 2010

It will be interesting to see how this develops and what 'spin' is put on this.

From where I sit, it doesn't look good - but I'm eager to read viking's assessment of the deal itself.

Cheers,
Shafique

Tom Jones · Mar 25, 2010

viking-warrior wrote:
RobbyG wrote:Throwing good money after bad money!

I am working throught the proposal now, and am having difficulty finding what money they are actually going to throw. The detailed documents read like a 13th secret code book, written by monks from some weird alien cult faith.

As far as I can devine thus far (am about 46% of the way through) the money to which you refer as being thrown, has already BEEN thrown, and it is proposed that that investment will be converted from debt to equity - thus Dubai will become a shareholder not creditor of DW.

The missing bit as far as I am concerned is the lack of a fungible guarantee (i.e. Federal or Abu Dhabi) as we do not rate Dubai as either a sovereign or equivalent credit. Not saying this is a deal breaker, but ...

will report in later

Excellent report VW.

Sure… let us know when you finish reading the proposal.

And on whether you think the proposal will be accepted by the creditors!!

bedro · Mar 26, 2010

Dubai govt or whoever have interest in getting things back in motion should realize it's not only debt repayment and restructuring Nakheel. That's a very important step if Dubai could ever think of being taken seriously and play a role in the regional/global economy. But Nakheel is a property developer, and without people their properties even if they have the means and the funds to build them will remain vacant.

Dubai will have to figure a way to create more jobs and to control its growth. It's way more complicated than the Nakheel advertising campaign: "They say ...., and we say what's next!"

I figure downsizing of Nakheel's operations is a reasonable and realistic thing to do. They could think of doing whatever they were supposed to do in the upcoming 5 years in 10 or 20 years...

Dubai Knight · Mar 26, 2010

The 64 billion $ question must be: which camelly bank did they lever open with a knife to find the cash? (I nearly wrote piggy bank!)Or did someone have a good dig down the side of the sofa in his majlis and find some loose change?

:shock:

Knight

RobbyG · Mar 26, 2010

In an effort to fool investors in a long term commitment, while converting debt into equity, DW is trying to make another buck from share sales in the future while continuing its operations. There is hope though, for all the mafia dollars flowing into real estate.

I wonder what the conversion price per share will be.

VW, any analysis to share with us?

uaekid · Mar 26, 2010

REPORTING !!! WOOOW the work ethics, leaking your company information without an authorization ... I'm learning so many good things from you guys , well viking-warrior I'm sorry but I’ve got to report you to your company and hopefully the company IT will track you down .

RobbyG · Mar 26, 2010

uaekid wrote:REPORTING !!! WOOOW the work ethics, leaking your company information without an authorization ... I'm learning so many good things from you guys , well viking-warrior I'm sorry but I’ve got to report you to your company and hopefully the company IT will track you down .

Only a backstabber would do that. You represent your people well mate.

Keep it up! You'll make alot of friends here.

bedro · Mar 26, 2010

Dubai Knight wrote:The 64 billion $ question must be: which camelly bank did they lever open with a knife to find the cash? (I nearly wrote piggy bank!)Or did someone have a good dig down the side of the sofa in his majlis and find some loose change?

Knight

I'd print a couple of more billions and call them "Dubai internal resources" :idea:

RobbyG · Mar 26, 2010

Abu Dhabi funds

Goldman Sachs Group Inc. London-based economist Ahmet Akarli said the restructuring plan fails to explain how Dubai will finance the $9.5 billion -- $3.8 billion of which it plans to provide from its own pocket in addition to funds lent to it last year by Abu Dhabi.

It’s also unclear how Dubai will repay the $20 billion it borrowed from U.A.E. federal and Abu Dhabi institutions, said Akarli. Abu Dhabi is the capital of the U.A.E. and holds about 7 percent of the world’s proven oil reserves.

Dubai’s debt difficulties will persist into 2010, 2011 and 2012, Goldman Sachs said on Dec. 13. The emirate must repay at least $55 billion in the next three years.

While Dubai has ruled out seeking more money from Abu Dhabi, it may have to swallow its pride yet again, said Mohammed Shakeel, an Abu Dhabi-based analyst on the U.A.E.

“Dubai is trying to show that it isn’t as dependent on its neighbor, but what will happen if its financial resources aren’t enough?,” he said.

http://www.bloomberg.com/apps/news?pid= ... DLHN_RlWi4

Chocoholic · Mar 27, 2010

uaekid wrote:REPORTING !!! WOOOW the work ethics, leaking your company information without an authorization ... I'm learning so many good things from you guys , well viking-warrior I'm sorry but I’ve got to report you to your company and hopefully the company IT will track you down .

Grow up Kid, the information is already in the public domain - press reports and people involved with the deal. Go back to sleep.

This is gross hypocrisy once again! So DW gets to constantly fleece people over it's debt, yet international investors in projects in DXB when they get have financial trouble get thrown into jail - er pot, keelt, black. Once again this makes Dubai a laughing stock, no one is taking it seriously anymore - did they ever?!

viking-warrior · Mar 27, 2010

Kid - Please go right ahead and "report" me to my company, I am sure that they would laugh there backsides off at reading your nonsense, if anything further cementing their deep distrust of anything Emirati. They are well aware of my leanings in regards to the UAE (balance being the objective).

As to a full and final analysis of the proposal, it is not possible because as I have found, and it has been confirmed by others, it is not final and has so many gaping holes in regards to where this money is going to come from and whether those loans will be senior or subordinate, guaranteed or not and by whom as to almost relegate the proposal to the realms of "work in progress".

Many of the core issues have just not been addressed. Whilst the goals are well documented - paying so and so over period X, I have grave concerns over the raising of capital to fund the proposal - Issuing bonds to pay back the bankers that you owe money too !!!???

Put another way - thats like being in a bankruptcy court and asking for approval to open a new credit card to pay off the one that has already filed against you in court !!

Put yet another way - Dubai World, were it a race horse, the kindest thing to do would be to and shoot it and stop the disease spreading, but unfortunately the fallout has contaminated so many that a cure needs to be sought. Reading the local press has been funny beyond belief - Ragh3ad X and Lokal Y telling us how wonderful and inspirational this proposal is (clearly without the slightest inkling of the content).

Kid, its not your ignorance that is offensive, its the way that you wear that ignorance with such arrogant pride. So go ahead and report me, I would welcome the chance to openly decry this "proposal" for what it is - a sham.

viking-warrior · Mar 27, 2010

Dubai World R.I.P.

So here is another take on the situation, from a more macro perspective

http://www.business24-7.ae/banking-finance/finance/dubai-govt-to-own-100-of-nakheel-after-plan-2010-03-25-1.73153

Dubai govt to own 100% of Nakheel after plan

http://www.khaleejtimes.com/DisplayArticle08.asp?xfile=data/business/2010/March/business_March576.xml&section=business

DP World’s Profit Dives

http://www.bloomberg.com/apps/news?pid=20601104&sid=axtnT3G2Lfk4

Dubai World Debt Plan Has Some Creditors Concerned, FT Says

So you take Nakheel out of the group, sell DP World onto the London Stock Exchange - what have you got left ?

Istithmar portfolio in tatters (Debt upto the eye balls and no asset value)
Limitless (actually very LIMITED)
EXOMOS (the Worlds leading private submarine manufacturer !!!)
Hotels (coming to an auction room near you at knock down bargain basement prices)

Oh yeah, debt, debt and more debt .....

:lol:

face it, the partys over

QED

Tom Jones · Mar 27, 2010

viking-warrior wrote:Dubai World R.I.P.

So here is another take on the situation, from a more macro perspective

http://www.business24-7.ae/banking-finance/finance/dubai-govt-to-own-100-of-nakheel-after-plan-2010-03-25-1.73153

Dubai govt to own 100% of Nakheel after plan

http://www.khaleejtimes.com/DisplayArticle08.asp?xfile=data/business/2010/March/business_March576.xml&section=business

DP World’s Profit Dives

http://www.bloomberg.com/apps/news?pid=20601104&sid=axtnT3G2Lfk4

Dubai World Debt Plan Has Some Creditors Concerned, FT Says

So you take Nakheel out of the group, sell DP World onto the London Stock Exchange - what have you got left ?

Istithmar portfolio in tatters (Debt upto the eye balls and no asset value)
Limitless (actually very LIMITED)
EXOMOS (the Worlds leading private submarine manufacturer !!!)
Hotels (coming to an auction room near you at knock down bargain basement prices)

Oh yeah, debt, debt and more debt .....

face it, the partys over

QED

Wow…that’s disturbing!!

What a mess indeed!!

I don’t think it’s all over for Dubai, but it will be a long, long, slow and painful climb!!!

Thanks VW for the great insight, which we would’ve never read in the press.

P.S. Pay the Kid no mind! He’s just a jokster!!!

viking-warrior · Mar 27, 2010

Not me ...

http://www.arabianbusiness.com/584613-where-will-dubais-38bn-shortfall-come-from

'Where will Dubai's $3.8bn shortfall come from?'
by Shane McGinley on Friday, 26 March 2010

According to the Dubai World statement released by the Dubai Government on Thursday the $9.5bn in new funding to restructure Dubai World's debts will be made up of $5.7bn left over from the previous loan from Abu Dhabi and the remainder will come "from internal Dubai Government resources".

However, where this remaining $3.8bn is going to come from is uncertain, a Dubai-based analyst told Arabian Business.

"This is the big issue with Dubai," said Tudor Allin-Khan, chief economist at HC Brokerage in Dubai.

"I don't know where the [$3.8bn] is going to come from. Is it money that is already there or will it come from the Sheikh I don't know?"

However, Allin-Khan said that while it was uncertain it not a worry as he believes the "money is available" and that "there is a lot of money in this country."

Earlier this year, Dubai ordered government departments to cut spending by 15 percent in order to save about $1bn and narrow the emirate's budget deficit and Allin-Khan said he believes this was one of the ways the Dubai Government will raise the $3.8bn.

He predicted that a rise in oil prices and the strengthening of the US dollar, which the UAE dirham is pegged to, will help the situation. He also forecast that some of Dubai World's lucrative assets, such as the QE2 cruise liner, would probably be sold off to finance the new funding required.

However, he concluded that the announcement as a whole signaled that the Dubai Government "is prepared to assist the market."

RobbyG · Mar 27, 2010

I'll buy Exomos, but only if Herve is going to run it and I get a job there. :lol:

viking-warrior · Mar 27, 2010

Tom Jones wrote:
Wow…that’s disturbing!!

What a mess indeed!!

I don’t think it’s all over for Dubai, but it will be a long, long, slow and painful climb!!!

Thanks VW for the great insight, which we would’ve never read in the press.

P.S. Pay the Kid no mind! He’s just a jokster!!!

I did not intend to imply that it was "over" for Dubai, more specifically, it's all over for Dubai World. There will be a long drawn out death knell, body writhing in pain, medics in attendance apply pressure pads and miracle cures but all to no avail ...

For sure there will be advisors and a plethora of experts charging fees for the next 3 years but as John Cleese once famously said "What's wrong with it! I'll tell you what's wrong with it. It's dead, that's what's wrong with it ...."

http://www.youtube.com/watch?v=4vuW6tQ0218

Dubai Knight · Mar 27, 2010

So that would be the Norwegian Blue Dubai World!

Its about time Monty Python and the financial situation in Dubai were measured in the same breath. There is a lot of similarity there!

Knight

viking-warrior · Mar 27, 2010

Python AND Faulty Towers

The list of potential candidates to play Manuel is limitless,

"I know nathing, I from Barcelona" said <please select name from list ............>, the former Chairman/CEO/Managing Director of <please select name of company from list ............>

Then you would have Sheikh Mo as Basil, smacking him with a shoe "You stupid little man..."

In a democracy (sic) this would have already been made into a satirical TV show

Right after "The UAE's got no Talent"
and after "Dancing on thin Ice"

BabyDoll · Mar 27, 2010

viking-warrior wrote:Kid - Please go right ahead and "report" me to my company, I am sure that they would laugh there backsides off at reading your nonsense, if anything further cementing their deep distrust of anything Emirati. They are well aware of my leanings in regards to the UAE (balance being the objective).

As to a full and final analysis of the proposal, it is not possible because as I have found, and it has been confirmed by others, it is not final and has so many gaping holes in regards to where this money is going to come from and whether those loans will be senior or subordinate, guaranteed or not and by whom as to almost relegate the proposal to the realms of "work in progress".

Many of the core issues have just not been addressed. Whilst the goals are well documented - paying so and so over period X, I have grave concerns over the raising of capital to fund the proposal - Issuing bonds to pay back the bankers that you owe money too !!!???

Put another way - thats like being in a bankruptcy court and asking for approval to open a new credit card to pay off the one that has already filed against you in court !!

Put yet another way - Dubai World, were it a race horse, the kindest thing to do would be to and shoot it and stop the disease spreading, but unfortunately the fallout has contaminated so many that a cure needs to be sought. Reading the local press has been funny beyond belief - Ragh3ad X and Lokal Y telling us how wonderful and inspirational this proposal is (clearly without the slightest inkling of the content).

Kid, its not your ignorance that is offensive, its the way that you wear that ignorance with such arrogant pride. So go ahead and report me, I would welcome the chance to openly decry this "proposal" for what it is - a sham.

Whilst we all know this is a tricky situation (or is it?!) but what is a better alternative? I mean are all the creditors better off without getting anything if DW just declare bankrupt or perhaps at least get something back over x number of years. I think if you were in the position of the current creditors, you will be frustrated no doubt but perhaps this is the best solution at the meantime. At least we all know Abu Dhabi has money and the big brother (although may let the little brother squirm a bit but he) wont let little brother die .....

Tom Jones · Mar 27, 2010

viking-warrior wrote:Python AND Faulty Towers

Right after "The UAE's got no Talent"
and after "Dancing on thin Ice"

And right before 'The Biggest Loser," and "Wheel of Misfortune!!!!!"

:lol:

RobbyG · Mar 27, 2010

Lets not forget 'The Emperor with no clothes on, after the tide went out'.

shafique · Mar 28, 2010

Or 'Deal, or no deal'?

Perhaps they'll use the song by Imagination 'It's just an illusion' as the theme tune?

:albino:

Chocoholic · Mar 28, 2010

'Who wants to be a fake millionaire'
'The great expat escape'
'Survivors who've done a runner'
'I've got wasta'

Berrin · Mar 28, 2010

Many of the core issues have just not been addressed. Whilst the goals are well documented - paying so and so over period X, I have grave concerns over the raising of capital to fund the proposal - Issuing bonds to pay back the bankers that you owe money too !!!???

Put another way - thats like being in a bankruptcy court and asking for approval to open a new credit card to pay off the one that has already filed against you in court !!

Another firm rule is that the more debt involved, the more people involved and the longer the bubble goes on, the worse the denoument will be. Remember the old saw:

If you owe the bank a million Dollars, you're in trouble, but

If you owe the bank a billion Dollars then your bank is in trouble?

Well, we've just invented a third line:

If you owe the bank a trillion Dollars, we're ALL in trouble.

A great read..
http://www.housepricecrash.co.uk/forum/ ... 1dff04c3bb

viking-warrior · Mar 28, 2010

Baby Doll

The following article illuminates the concerns that I had/have - today's National

http://www.thenational.ae/apps/pbcs.dll/article?AID=/20100328/BUSINESS/703289934/1005

Banks query fresh funds for Dubai World

Uta Harnischfeger

* Last Updated: March 28. 2010 9:39PM UAE / March 28. 2010 5:39PM GMT

Banks are questioning the source of US$3.5 billion (Dh12.85bn) of fresh funds that form a key part of a restructuring plan submitted to Dubai World creditors last week.

While regional markets have responded positively to the proposals, bankers say the plan raises new questions about the emirate’s ability to repay debts, even if the bulk of Dubai World loans are rolled over.

On Wednesday, the Dubai Government presented a proposal for restructuring $23.5bn of Dubai World debt in which banks were asked to roll over their loans to longer maturities of up to eight years. The offer has not yet been approved by bank creditors, which were owed $14.2bn at the end of last year.

As part of the plan, Dubai is offering $3.8bn of new money, which it said would come “from internal government resources”, without elaborating further.

The restructuring plan looked unlikely “to put the total external debt over gross domestic product on a sustainable trajectory”, the Morgan Stanley analyst Paolo Batori wrote in a report.

Dubai already has $109.5bn of outstanding debt, according to estimates from the IMF.

Under a budget approved in January, the Dubai Government expects to run a Dh6bn deficit this year, its second shortfall in a row. That would be equal to about 2 per cent of GDP. This is despite cutting spending by 6 per cent. Morgan Stanley doubted that the rollover of loans would be sufficient for Dubai to put the total external debt-GDP ratio on a sustainable track.

Credit Suisse said the Dubai Government may not have much cash left to fund other unfinished property projects. “Although we believe this may result in a need to issue bonds, the Government said that there is no intention to issue any bonds in the near term,” the Swiss bank said.

EFG-Hermes said it expected Dubai’s fresh capital injection to come from asset sales and cost savings. However, the Egyptian investment bank called the restructuring “better than expected” and said the “preferential treatment” of sukuk, or Islamic bond, holders “could be positive for coming bond issuances as well as future refinancing and restructuring of international capital markets in general”.

JP Morgan also warned that the plan may be “negative” because it lacked any explicit government guarantees and, with the Dubai Government merely injecting $1.5bn in fresh money into Dubai World, the conglomerate’s creditors would rely on asset sales and dividends going forward. “There is no mention of a government repayment guarantee for Dubai World’s bank creditors,” Zafar Nazim, a London-based analyst at the bank, wrote in a report last Thursday.

“The Government intends to inject only $1.5bn of cash into Dubai World to support its creditors and working capital commitments. In essence, Dubai World’s creditors will be relying upon assets sales and dividends.”

Morgan Stanley also expressed worries that the restructuring may drag out longer than expected.

The bank said hints by Dubai World that the discussions with creditor banks may take a while “can hide lack of consensus on the announced terms, causing potential risks ahead”.

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