Ramsco's Women Empowerment Initiative Recognized Among Top BRICS Businesswomen Practices for 2025    Egypt, Elsewedy review progress on Ain Sokhna phosphate complex    Gold prices end July with modest gains    Pakistan says successfully concluded 'landmark trade deal' with US    Egypt's FM, US envoy discuss Gaza ceasefire, Iran nuclear talks    Modon Holding posts AED 2.1bn net profit in H1 2025    Egypt's Electricity Ministry says new power cable for Giza area operational    Egypt's Al-Sisi, Italian defence minister discuss Gaza, security cooperation    Egypt's FM discusses Gaza, Nile dam with US senators    Aid airdrops intensify as famine deepens in Gaza amid mounting international criticism    Health minister showcases AI's impact on healthcare at Huawei Cloud Summit    On anti-trafficking day, Egypt's PM calls fight a 'moral and humanitarian duty'    Federal Reserve maintains interest rates    Egypt strengthens healthcare partnerships to enhance maternity, multiple sclerosis, and stroke care    Egypt keeps Gaza aid flowing, total tops 533,000 tons: minister    Indian Embassy to launch cultural festival in Assiut, film fest in Cairo    Egyptian aid convoy heads toward Gaza as humanitarian crisis deepens    Culture minister launches national plan to revive film industry, modernise cinematic assets    Rafah Crossing 'never been closed for one day' from Egypt: PM    I won't trade my identity to please market: Douzi    Two militants killed in foiled plot to revive 'Hasm' operations: Interior ministry    Egypt's EHA, Huawei discuss enhanced digital health    Egypt, Oman discuss environmental cooperation    Egypt's EDA explores pharma cooperation with Belarus    Foreign, housing ministers discuss Egypt's role in African development push    Egypt reveals heritage e-training portal    Three ancient rock-cut tombs discovered in Aswan    Sisi launches new support initiative for families of war, terrorism victims    Egypt expands e-ticketing to 110 heritage sites, adds self-service kiosks at Saqqara    Egypt's Irrigation Minister urges scientific cooperation to tackle water scarcity    Palm Hills Squash Open debuts with 48 international stars, $250,000 prize pool    On Sport to broadcast Pan Arab Golf Championship for Juniors and Ladies in Egypt    Golf Festival in Cairo to mark Arab Golf Federation's 50th anniversary    Germany among EU's priciest labour markets – official data    Paris Olympic gold '24 medals hit record value    A minute of silence for Egyptian sports    Russia says it's in sync with US, China, Pakistan on Taliban    It's a bit frustrating to draw at home: Real Madrid keeper after Villarreal game    Shoukry reviews with Guterres Egypt's efforts to achieve SDGs, promote human rights    Sudan says countries must cooperate on vaccines    Johnson & Johnson: Second shot boosts antibodies and protection against COVID-19    Egypt to tax bloggers, YouTubers    Egypt's FM asserts importance of stability in Libya, holding elections as scheduled    We mustn't lose touch: Muller after Bayern win in Bundesliga    Egypt records 36 new deaths from Covid-19, highest since mid June    Egypt sells $3 bln US-dollar dominated eurobonds    Gamal Hanafy's ceramic exhibition at Gezira Arts Centre is a must go    Italian Institute Director Davide Scalmani presents activities of the Cairo Institute for ITALIANA.IT platform    







Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.



Dubai World sale of crown jewels seen as last option

DUBAI: Dubai World's willingness to sell prized assets such as ports operator DP World to pay down its debt pile is considered such a drastic move that analysts see it more as a last-resort bargaining tactic.
Documents obtained by Reuters this week revealed the surprising news that the debt-laden conglomerate was willing to let go of "strategic assets" such as DP World, Jebel Ali Free Zone and Dubai Maritime City (DMC) as part of a $19.4-billion fundraising effort as it tries to reach a restructuring deal with creditors by Oct. 1.
By displaying its willingness to put these assets on the block, Dubai World is effectively offering creditors an insurance policy that if the restructuring plan runs into trouble, it will sell core, strategic assets.
In reality, analysts said, it would be too painful for Dubai World to dispose of its crown jewels.
"These are success stories and they are the core of the Dubai trade industry," said Mohammed Yasin, chief executive of Shuaa Securities. "They are highly sought after and therefore they are the carrots at the end of the stick that they are using to make the lenders accept their terms."
Dubai built itself into a global trade and business hub over the last decade, becoming a primary destination for foreign investment with its ambitious real estate and infrastructure projects. The emirate was hard hit by the global financial crisis as its property market crashed late 2008.
Dubai World shocked markets in November when it announced plans for a standstill agreement and the restructuring of $26 billion in debt. This put Dubai's hard-won global brand in jeopardy and selling symbols of its success and an integral part of its economy would be the final blow.
"If you sell those, you sell Dubai," a person involved in the restructuring process said.
The symbolic value of these assets is also crucial and their loss could have political repercussions, analysts said.
"There is so much prestige that will be lost in this," said British historian Christopher Davidson. "To my mind it is really the political damage that matters more than anything because the ruler has put so much into saving face and giving the impression that we'll pick up again fast and it will be business as usual."
Dubai World is controlled by Dubai's government, led by Sheikh Mohammed bin Rashid Al-Maktoum, who also has direct business interests across the economy.
About face
Dubai World said at the start of their debt debacle that assets such as DP World and Dry Docks World would not be included in its debt restructuring. However, asset sales including top names had always been part of the plan, despite a clear reluctance to sell.
Under the current restructuring plan, the potential sale of those assets would come at the end of the eight-year period designated for the sales process.
"By pushing the local assets, or those with a local presence, to the latter part of the sale process, they are hoping that by that time things will get better and if they do they can refinance the debt," said Yasin.
The proposed sale of the port operator, whose first-half results exceeded expectations, is not scheduled until 2016, and even then analysts are skeptical a majority stake would be sold.
"DP World is one of their (Dubai government) jewels, one of their best performing assets... and it goes with the story of Dubai as a trade and business hub so I don't think they'll let it go... In the worst case scenario they will still own a majority stake," said a Dubai-based analyst.
Alternatives
The lack of a back-up plan, reliance on a global economic recovery in its restructuring plan, and the deterioration in the value of its international investment portfolio, all leave Dubai World — and by extension Dubai — in a tight spot.
Even if the company manages to offload all its international assets before the clock runs out for its more prized possessions, the proceeds from these sales may not help much in repaying its mounting debt burden, signaling the extent of depletion in the value of its trophy assets.
Most of Dubai World's storied international portfolio was acquired at peak prices before the financial crisis, including assets such as luxury retailer Barney's and casino operator MGM Resorts International.
The firm's private equity arm, Istithmar, which owns most of the overseas assets, is expected to raise a maximum of $4.5 billion over a five year period, according to the firm's own best estimate.
Dubai World subsidiary Infinity paid about $2.2 billion for a 5.9 percent stake in MGM in October 2007 and $4.8 billion for an investment in its Las Vegas development, CityCenter. Infinity's MGM stake was bought at an average price of $83.15 per share in October 2007. MGM shares closed at $9.4 in the New York Stock Exchange on Wednesday.
If Dubai World fails to raise the necessary funds, this could see Abu Dhabi stepping in once again to aid its struggling neighbor. Some would argue that this would cause as much harm to the Dubai brand as selling off its prize possessions. –Additional reporting by Dinesh Nair, Nicolas Parasie and Cynthia Johnston


Clic here to read the story from its source.