Dubai World to face creditors with repayment plans

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The Independent Online

Dubai World, the hugely indebted state-owned conglomerate, will present its initial proposals on repaying its creditors at a meeting in the emirate tomorrow.

Up to 90 creditors will attend the meeting beside financial restructuring experts from KPMG. The big four accountant is representing banks, including HSBC and Royal Bank of Scotland, that are owed more than $30bn (£19bn).

A source close to creditors said: "The meeting was called by Dubai World executives. They will kick off by saying what they're expecting of creditors and when they will come up with a finalised restructuring proposal."

Deloitte and Rothschild are advising Dubai World, which shocked global markets last month by demanding a standstill on a chunk of its repayments. The meeting could see Dubai World request a formal standstill on around $26bn.

It is understood that international companies owned by major Dubai investors have been examining potential sales processes for most of 2009, aware that the emirate was failing.

Many creditors are understood to have lent vast sums to Dubai companies on the basis that they were too big to fail, as the state would bail them out. However, a long-standing government decree means that the state is not liable.

"Many lenders have advanced money on the basis that the emirate was not going to let Dubai World default on its obligations," said a market source. "However, the company was set up by a decree that explicitly says that the government and ruler are not responsible for its debts."

The emirate has already received a $10bn bailout from neighbour Abu Dhabi to cover some of Dubai World's financial difficulties.

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