Published: September 13 2010 03:08 Last updated: September 13 2010 03:08
Aurelius Capital Management, a US distressed debt fund, is the only creditor of Dubai World not to have approved a restructuring agreement on the troubled conglomerate’s $25bn of liabilities, according to people close to the talks.
Dubai World said on Friday that it had reached a formal agreement to restructure a total of $24.9bn, which includes $10bn owed to the government, with more than 99.9 per cent of its creditors.
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The deal involves Dubai World repaying its loans over five to eight years, at sub-commercial interest rates.
The Financial Times has learnt that Aurelius Capital was the only creditor out of more than 70 not to have cast a vote by the deadline last Thursday.
By doing so, the fund has forsaken fees paid to creditors that signed up to the deal in advance of the deadline.
Some people close to the deal believe that the fund – which bought $5m of debt in the secondary market – could still vote in favour of the deal. In June a $25m tranche of a $5.5bn loan was traded at 55 per cent of its face value.
Aurelius Capital declined to comment.
Dubai World has been seeking the support of 100 per cent of its creditors to avoid the use of a special tribunal to implement its restructuring – but it is uncertain whether the tribunal will be needed.
The conglomerate has started to draft the restructuring documentation on the assumption that legal proceedings will be unnecessary, one person close to the deal said.
The government hopes that a resolution to the restructuring of Dubai World’s debt will help to foster recovery.
Analysts have long forecast that a restructuring deal could act to embolden renewed foreign investment flows and to boost stock market sentiment.
However, bankers warned that although Dubai World’s restructuring agreement was a positive step forward for the embattled emirate, it would take time for it to emerge from the shadow of its estimated $100bn debt mountain, and a severe property crash.
Dubai World’s developer Nakheel is still separately negotiating with banks about its $10bn debts, and last week a unit of Dubai Holding – a conglomerate owned by Dubai’s ruler – announced that it was for a second time to defer the payment of a revolving credit facility, as it attempts to reach a wider settlement on as much as $20bn of debt.
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