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Dubai Fears Reignite On $1.25Bn Debt Payment Delay

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http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7773045/Dubai-fears-reignite-on-1.25bn-debt-payment-delay.html

Dubai's most powerful private equity company, which owns stakes in Travelodge, Merlin Entertainment and DaimlerChrysler, has been forced to delay the repayment of a $1.25bn (£860m) tranche of debt in a shock move that has renewed fears in the emirate's financial stability.

Dubai International Capital (DIC), which is the investment arm of Dubai Holding, a conglomerate owned by the ruler, Sheikh Mohammed bin Rasid al Maktoum, announced it has secured agreement with its six lending banks to push back the repayment of the debt from June until September.

In a short statement, the company said: "The extension period would allow the implementation of a consensual longer-term plan that would enable DIC to maximise the value of its business for the benefit of all its stakeholders."

DIC and its banks agreed to the three-month delay at a meeting in Dubai yesterday. The banks, which are led by HSBC and Emirates Bank, were represented by Deloitte while Lazard, the London-based investment bank, was acting for DIC. The company has agreed to continue to pay interest and amortisation to keep the loans current, a DIC spokesman said.

The move comes amid increasing efforts by government-related entities to restructure loans as Dubai seeks to manage its $109bn debt burden.

Foreign banks, including British banks, have a large exposure to Dubai's debts, which adds to the concern about the financial institutions that are already under pressure from Europe debt crisis.

Just six months ago Dubai World, the bigger conglomerate behind Dubai Ports World, stunned global markets by announcing the need for a standstill agreement on its debts.

Last week, Dubai World said it has agreed in principle with its main creditors to restructure $23.5bn of debt and that it will now seek a final deal with all its creditors by end June.

Dubai Holding is smaller than Dubai World but, since it is owned and controlled by Sheikh Mohammed bin Rasid al Maktoum, its inability to pay its debts is more surprising. The conglomerate is thought to have around $12bn of debt due of which $2.6bn is held by DIC, including the $1.25bn that has just been delayed.

Still it's contained and with the Greek farce Dubai has moved off the radar it would seem.

The dominoes are still wobbling, can they keep propping them up so they don't fall?

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The world of financial jelly has arrived!

There is so much just hiding from the radar. Ocasionally it squeezes out and the markets wobbbbbbbllllee. One day the bubble pump will stop working and then the balloon will fly round the room. 'Tired man with money pump seen in BoE' is the headline.

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"The extension period would allow the implementation of a consensual longer-term plan..."

I love the use of 'consensual'. Sounds so inoffensive doesn't it - even sexy. Soon Greece will be looking for a 'consensual' plan too. I think we're going to see a lot more of this word over the next few years.

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Travelodge, Merlin Entertainment and DaimlerChrysler

Selling pressure from a major shareholder? Sounds ripe for a short, if you're a speculator. Or opportunities to acquire a business from a distressed seller, if you're a big, cash-rich investor.

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I love the use of 'consensual'. Sounds so inoffensive doesn't it - even sexy. Soon Greece will be looking for a 'consensual' plan too. I think we're going to see a lot more of this word over the next few years.

I like it consensual.

Looks like we have a new buzz word to play with.

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  • 145 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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