Dubai World caused further recriminations on global markets yesterday, when the emirate's finance minister conceded that the debt- riddled group would need longer than six months to unravel its complex borrowing arrangements.
Abdulrahman al-Saleh said the conglomerate, which two weeks ago caused panic in financial markets when it asked creditors for an extra six months to repay a small slice of its debt, would need more time to restructure its $59.3bn of liabilities. The news triggered falls in stock markets around the world.
"The period of six months would be too short for a full restructuring," Mr al-Saleh told Al Arabiya television. "The six-month period would focus on the creditors, the contractors and so on."
Dubai's government would support the group "as an owner", he added. "The government is present to provide backing as an owner... we would like to emphasise the distinction between guaranteeing and backing. The company has received [a lot of] backing from the government since its inception."
Investors had hoped that Dubai's government, or that of neighbouring Abu Dhabi, would rescue Dubai World. So far, Abu Dhabi has offered only lukewarm support. The minister stressed that Dubai World had sufficient assets to meet its obligations. Royal Bank of Scotland, which is 84 per cent owned by the British taxpayer and has the biggest exposure of all UK lenders to Dubai World, saw its shares price fall by 7.7 per cent yesterday. Discussions between Dubai World and its biggest lenders started on Monday. A full creditors meeting has been scheduled for 21 December.
Moody's, the ratings agency, yesterday downgraded several Dubai World companies to "junk" status, saying that it was clear that they did not enjoy the backing of the city-state.Reuse content