Abu Dhabi and Dubai – 14/12/2009
Abu Dhabi has bailed out neighbouring Dubai with 10 billion in astonishment help for debt-laden Dubai World, which said it would use 4.1 billion of it to return its Nakheel units Islamic bond maturing on Monday.
The government of Dubai held a conference call on Monday to discuss the deal with a government source taking questions.
Following is a transcript of the key points made by the source, who declined to give his name.
Abu Dhabi and Dubai are indisputably working as partners here to find a good, equitable solution to the Dubai World situation. The key part is buying time to permit Dubai World and creditors the possibility to come together on reciprocal restructuring.
There are no conditions. This is a government-to-government fund, the terms of that fund are internal to the government of Abu Dhabi and Dubai. These funds are specifically for Dubai World.
I will not go into specifics. There is no conditionality. Abu Dhabi has made it clear it is there to support Dubai, Dubai World and I will not go into specifics of how the money is being handed. Whats momentous is we have two partners that will help each other and help the UAE (United Arab Emirates).
The government of Dubai has been in consultation for some time with bankruptcy professionals and international judges to develop a framework that is pellucid, equitable and acceptable to all parties.
The current UAE bankruptcy laws are largely untested and (their) administration by Dubai courts poses certain challenges and problems for a large and complex bankruptcy of this size.
These (new) laws should permit Dubai World, should it choose it to use the laws to reach its restructuring and remaining obligations should it not find a reciprocal restructuring with its creditors.
This is something the company will provide lucidity on in the coming several weeks. We wanted to give the company a framework and provide a process with which they can have that conversation with lenders.
From a government perspective, the company needs to find a long-term decision to the capital structure and had to put tools in place for them to do that.