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Dubai World accepts US$14.6b deal with all creditors

[DUBAI] Dubai World, the state-owned company at the center of the emirate's 2009 financial crisis, has reached an agreement with all of its creditors to amend and extend terms on about US$14.6 billion of debt.

As a result of the agreement, the company has applied to withdraw a court application for Decree 57, Adrian Cohen, partner at Clifford Chance LLP and Dubai World counsel, told a tribunal hearing in Dubai on Sunday. The court action would have allowed Dubai World to force the new terms onto lenders that haven't agreed to them, providing at least two-thirds of creditors consented to the deal.

Dubai World, which owns stakes port operator DP World Ltd and shipyard Drydocks World LLC, was one of several companies in the emirate to delay debt payments when credit markets froze and asset prices slumped during the financial crisis. The company in November agreed to sell a subsidiary, including its Jebel Ali Free Zone FZE logistics park in Dubai, to DP World for US$2.6 billion.

All creditors to the company have now signed so-called lock-up agreements, which require them to support the deal to amend and extend the terms of the debt, Robin Abraham, partner at Clifford Chance and adviser to Dubai World, told reporters today after the hearing.

"It will take about another four to six weeks to get all creditors to sign the final debt agreement," Mr Abraham said. "The process of getting all creditors to sign this agreement will start imminently."

The court has adjourned until May 10 and will approve Dubai World's application to withdraw the application when the deal is finalized. The company may apply to halt the Decree 57 process sooner than May 10 if creditors sign the new debt terms earlier, Abraham said.

Lenders to Dubai World have approved a deal entailing the early repayment of US$2.92 billion due this year and the extension of debt due in 2018 to 2022. Banks will also receive higher interest payments in return for extending the tenor of the debt, people familiar with the matter told Bloomberg in December. Dubai World had consent from 73 per cent of its creditors to the new terms, it said at a court hearing in January.

Drydocks World used the tribunal in Aug 2012 to sanction a US$2.2 billion debt restructuring. Drydocks filed an application to the Dubai tribunal to block lawsuits after failing to win support from all lenders.