DUBAI: Struggling conglomerate Dubai World signed a final agreement with creditors to restructure $24.9 billion in debt on Wednesday, switching the focus onto how it will pay for the deal.
The state-owned conglomerate at the centre of Dubai's debt crisis ? its 2009 debt standstill request shook global markets -- said it had signed a final deal with 80 creditors to repay its obligations over five to eight years.
"The agreement will help in its final form to preserve the financial position of the emirate," Mohammed al-Shaibani, deputy chief of Dubai's fiscal committee, said in a statement.
"It (creates) a good position to achieve the fullest possible use of financial resources without overwhelming the resources or influence them negatively."
Abdul Kadir Hussain, chief executive of Mashreq Capital, said the market was waiting for signs that Dubai would reduce debt levels through asset sales or equity listings.
"What we've had so far is leverage that's been pushed back in terms of repayment, but we haven't seen a reduction in absolute debt levels," he said. "We're looking for the next steps now."
The debt plan says there will be asset sales ? which could include prized assets like ports operator DP World ? but Dubai has been clearly reluctant to sell off its crown jewels. Top Dubai officials said in November there might be a privatisation plan.
Stakes in assets such as DP World, Emirates Airlines and Dubai Electricity and Water Authority (DEWA) are attracting keen interest from potential investors.
DP World sold 75 percent of its Australian operations for $1.5 billion in December.
Dubai is estimated to have liabilities of about $115 billion, with some $30 billion in bonds and loans owed by state-linked firms slated to mature in 2011-2012.
Other state-linked Dubai entities have been restructuring debt and in some cases selling off minor stakes. Dubai International Capital on Wednesday sold its stake in valve maker KEF Holdings for $178 million.
According to restructuring documents obtained by Reuters in August, Dubai World said it was prepared to sell prized assets in a bid to raise as much as $19.4 billion to repay creditors.
Under the terms of Dubai World's two-tranche debt repayment plan, creditors will receive $4.4 billion in five years, while the second tranche will involve $10.3 billion over eight years, carrying a fixed interest rate of 2.4 percent.
The remainder is owed to the Dubai government, which will convert its debt into equity capital, and group company Nakheel, which is undergoing its own debt restructuring.
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