DUBAI: Dubai Group will be spun off as an independent company with creditors owning an equity stake after its planned $10 billion debt restructuring, the chief executive of parent Dubai Holding said in an interview on Thursday.
Dubai Group, a unit of Dubai Holding, the investment arm of the emirate's ruler Sheikh Mohammed bin Rashid al-Maktoum, expects to sign an agreement with its creditors on the debt restructuring in six weeks, Ahmad Bin Byat said.
After the restructuring, Dubai Group's board will include representatives from creditor banks and shareholders, as well as independent members, he said.
The proposal includes asset sales, though Dubai Group does not expect to dispose of any of its major assets this year, he said. Assets include a 14.7 percent stake in Oman's top lender, Bank Muscat, and 18 percent of Egypt's EFG Hermes . Dubai Group also owns part of Borse Dubai, which holds 20.6 percent of the London Stock Exchange.
Dubai Group's creditors are being asked to extend their obligations for between 3.5 and 12 years, depending on the assets secured against their exposure, to allow the company's assets to recover in value before divestment.
For unsecured creditors, who have been offered a 12-year extension, there is an option to be repaid after five years, albeit at a discount.
The restructuring would see Dubai Group's debt removed from the balance sheet of parent Dubai Holding.
"As of yesterday, the debt was on Dubai Holding's books. But once the agreement is signed, I can say as of today, $10 billion debt is off our books and will be carried by the owners of Dubai Group," Bin Byat said.
"Dubai Group still has to pay Dubai Holding $4 billion of internal debt, and that's why we will be sitting on the board along with creditors. Dubai Group will remain at arm's length." (Reuters)
