Dubai World $14.6bn Debt Deal Creditor Vote Set For March 17

The court administering Dubai World’s restructuring has set March 17 as the provisional date for creditors to vote on whether to back a $14.6 billion debt deal.

The Dubai World Tribunal on Tuesday held its first hearing on a second major restructuring in four years, aimed at securing a more sustainable debt repayment schedule for the conglomerate than the timetable agreed in a 2011 deal.

Under the plan, announced by Dubai World on Monday, part of its debt will be repaid early and the maturity of the rest extended by four years to 2022 with added incentives for creditors.

Speaking at the hearing on behalf of Dubai World, Mark Hyde of law firm Clifford Chance said the restructuring was expected to be completed by early May.

Dubai’s economy has rebounded strongly from a local property crash which triggered a wave of debt restructurings at state-owned entities at the turn of the decade — most notably Dubai World’s request for a debt standstill on $25 billion of obligations in 2009 that resulted in a global markets sell-off.

Hyde said 73.01 per cent by value of creditors that would vote on the latest restructuring deal had signed a document saying they would support it.

Including government creditors, which have waived voting rights because of a conflict of interest, the approval rate stands at 66.92 per cent, he said.

That is still above the 66.67 per cent level at which Dubai World can amend the original terms of the restructuring. Over this level, and with court approval, it can impose the agreement on any dissenting creditors — a process known as a ‘cramdown’.

“The majority of creditors who have agreed to the restructuring proposal have signed a lock-up agreement, contractually committing them to agree to the restructuring,” Hyde said.

EARLY BIRD

Hyde said Dubai World expected creditor support to rise ahead of a Feb. 8 deadline which gives lenders an ‘early bird’ premium. He did not disclose specifics of the incentive.

But ahead of the closing, there are a number of hurdles. A hearing, set for Feb. 15, will see Dubai World put its case to the three-member judicial panel managing the process and see creditors categorised into voting classes.

Hyde said Dubai World had requested the court club all creditors into a single voting category. Such a move would help Dubai World and speed a deal, as it would prevent creditors from fighting each other to secure preferential treatment.

If there are no hold-ups, a valuation date will take place on March 6, when creditors will put a value to their claims adjusting to currency market fluctuations, and they will submit details of claims on March 12, ahead of the final voting date.