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DUBAI, March 21 (Reuters) - State-owned conglomerate Dubai World is expected to propose a $26 billion debt restructuring plan to its creditors imminently, in a move seen as a test of the emirate's ability to honour commitments.
Discussions have focussed on a range of options, from an extension of maturities, to taking a haircut but with earlier repayment, and even the banks taking a possible stake in the indebted firm.
The following Q&A sets out the main issues regarding the upcoming proposal, and next steps in the process.

WHY IS DUBAI WORLD PRESENTING A RESTRUCTURING PLAN?
Dubai World, one of three flagship holding companies of the Dubai government, invested heavily in the real estate boom which eventually burst in late 2008.
Banks lent easily to Dubai World and its subsidiaries, assuming implicit government backing. After the global financial crisis, refinancing needs soared as banks stopped lending.
In November, Dubai World said it would seek a delay on repaying $26 billion in debt, linked to its property units Nakheel and Limitless. The news caused global markets to tumble on fears the emirate could no longer service its debt.

WHAT IS THE RESTRUCTURING PROPOSAL LIKELY TO CONTAIN?
A range of options are being considered to restructure Dubai World's debt, some more likely to be accepted than others, although some creditors want nothing less than full repayment.
As details of negotiations emerge, the potential for banks being forced to take a "haircut" appears to be reduced, but repayment terms are likely to contain an extension of maturities of five to 10 years and a reduction in interest income.

WILL BANKS ACCEPT THE DEAL?
Any deal seen to offer full repayment is likely to be well received by creditors but the fine print will be key, including the length of any extensions and payment of interest.
It is also likely that banks want to see a change in how Dubai World is run, and while the company is unlikely to welcome creditors taking a seat on the board, greater involvement from Abu Dhabi, through a stake option, might be a mutual compromise.

WHAT IF BANKS REJECT THE PLAN?
Creditors will be wary rejecting any proposal outright; several international banks have long standing relationships in the region which they will want to preserve, particularly in light of the Gulf's growth outlook.
Local banks are closely linked to the government, and may have little choice but to accept. Even in the case of a haircut, local banks may end up being recapitalised to limit damage.
If they reject its offer, creditors will force Dubai World into bankruptcy and a special tribunal related to Dubai World has been set up to hear cases.
Taking Dubai World or its units to court is seen as the least favoured outcome.

WHO ARE DUBAI WORLD'S CREDITORS?
About 97 banks are affected by Dubai World's restructuring, seven of whom - considered the most exposed - have formed an informal coordinating committee.
The committee consists of British banks HSBC, Standard Chartered, RBS and Lloyds, as well as two UAE banks, Emirates NBD and Abu Dhabi Commercial Bank.
Asian lenders are also thought to hold a sizeable proportion of exposure to Dubai World units, and Bank of Tokyo Mitsubishi, a unit of Mitsubishi UFJ Financial Group was added to the informal banks' committee in January.
China Construction Bank, another Asian heavyweight, is also baying for a bigger say in the negotiations.

WHAT HAPPENS NEXT?
The next stage in the Dubai World debt situation is to present a plan to the seven banks on the informal panel, who will then forward it to the full creditor group to consider.
Negotiations could be long and protracted.
The proposals will be pored over by risk committees and by the banks' management and board of directors and negotiations will commence.
If anything less than full repayment is proposed, then a formal creditor committee may be formed which could include more or fewer banks, and different banks to the current panel.
(Reporting by Rachna Uppal; Editing by Hans Peters) Keywords: EMIRATES DEBT/Q+A Keywords: EMIRATES DEBT/Q+A =2 Keywords: EMIRATES DEBT/Q+A =3

(rachna.uppal@thomsonreuters.com; +971 4 391 8301; Reuters Messaging: rachna.uppal.reuters.com@reuters.net)

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Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.

DUBAI, March 21 (Reuters) - State-owned conglomerate Dubai World is expected to propose a $26 billion debt restructuring plan to its creditors imminently, in a move seen as a test of the emirate's ability to honour commitments.
Discussions have focussed on a range of options, from an extension of maturities, to taking a haircut but with earlier repayment, and even the banks taking a possible stake in the indebted firm.
The following Q&A sets out the main issues regarding the upcoming proposal, and next steps in the process.

WHY IS DUBAI WORLD PRESENTING A RESTRUCTURING PLAN?
Dubai World, one of three flagship holding companies of the Dubai government, invested heavily in the real estate boom which eventually burst in late 2008.
Banks lent easily to Dubai World and its subsidiaries, assuming implicit government backing. After the global financial crisis, refinancing needs soared as banks stopped lending.
In November, Dubai World said it would seek a delay on repaying $26 billion in debt, linked to its property units Nakheel and Limitless. The news caused global markets to tumble on fears the emirate could no longer service its debt.

WHAT IS THE RESTRUCTURING PROPOSAL LIKELY TO CONTAIN?
A range of options are being considered to restructure Dubai World's debt, some more likely to be accepted than others, although some creditors want nothing less than full repayment.
As details of negotiations emerge, the potential for banks being forced to take a "haircut" appears to be reduced, but repayment terms are likely to contain an extension of maturities of five to 10 years and a reduction in interest income.

WILL BANKS ACCEPT THE DEAL?
Any deal seen to offer full repayment is likely to be well received by creditors but the fine print will be key, including the length of any extensions and payment of interest.
It is also likely that banks want to see a change in how Dubai World is run, and while the company is unlikely to welcome creditors taking a seat on the board, greater involvement from Abu Dhabi, through a stake option, might be a mutual compromise.

WHAT IF BANKS REJECT THE PLAN?
Creditors will be wary rejecting any proposal outright; several international banks have long standing relationships in the region which they will want to preserve, particularly in light of the Gulf's growth outlook.
Local banks are closely linked to the government, and may have little choice but to accept. Even in the case of a haircut, local banks may end up being recapitalised to limit damage.
If they reject its offer, creditors will force Dubai World into bankruptcy and a special tribunal related to Dubai World has been set up to hear cases.
Taking Dubai World or its units to court is seen as the least favoured outcome.

WHO ARE DUBAI WORLD'S CREDITORS?
About 97 banks are affected by Dubai World's restructuring, seven of whom - considered the most exposed - have formed an informal coordinating committee.
The committee consists of British banks HSBC, Standard Chartered, RBS and Lloyds, as well as two UAE banks, Emirates NBD and Abu Dhabi Commercial Bank.
Asian lenders are also thought to hold a sizeable proportion of exposure to Dubai World units, and Bank of Tokyo Mitsubishi, a unit of Mitsubishi UFJ Financial Group was added to the informal banks' committee in January.
China Construction Bank, another Asian heavyweight, is also baying for a bigger say in the negotiations.

WHAT HAPPENS NEXT?
The next stage in the Dubai World debt situation is to present a plan to the seven banks on the informal panel, who will then forward it to the full creditor group to consider.
Negotiations could be long and protracted.
The proposals will be pored over by risk committees and by the banks' management and board of directors and negotiations will commence.
If anything less than full repayment is proposed, then a formal creditor committee may be formed which could include more or fewer banks, and different banks to the current panel.
(Reporting by Rachna Uppal; Editing by Hans Peters) Keywords: EMIRATES DEBT/Q+A Keywords: EMIRATES DEBT/Q+A =2

(rachna.uppal@thomsonreuters.com; +971 4 391 8301; Reuters Messaging: rachna.uppal.reuters.com@reuters.net)

COPYRIGHT

Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.

DUBAI, March 21 (Reuters) - State-owned conglomerate Dubai World is expected to propose a $26 billion debt restructuring plan to its creditors imminently, in a move seen as a test of the emirate's ability to honour commitments.
Discussions have focussed on a range of options, from an extension of maturities, to taking a haircut but with earlier repayment, and even the banks taking a possible stake in the indebted firm.
The following Q&A sets out the main issues regarding the upcoming proposal, and next steps in the process.

WHY IS DUBAI WORLD PRESENTING A RESTRUCTURING PLAN?
Dubai World, one of three flagship holding companies of the Dubai government, invested heavily in the real estate boom which eventually burst in late 2008.
Banks lent easily to Dubai World and its subsidiaries, assuming implicit government backing. After the global financial crisis, refinancing needs soared as banks stopped lending.
In November, Dubai World said it would seek a delay on repaying $26 billion in debt, linked to its property units Nakheel and Limitless. The news caused global markets to tumble on fears the emirate could no longer service its debt.

WHAT IS THE RESTRUCTURING PROPOSAL LIKELY TO CONTAIN?
A range of options are being considered to restructure Dubai World's debt, some more likely to be accepted than others, although some creditors want nothing less than full repayment.
As details of negotiations emerge, the potential for banks being forced to take a "haircut" appears to be reduced, but repayment terms are likely to contain an extension of maturities of five to 10 years and a reduction in interest income.

WILL BANKS ACCEPT THE DEAL?
Any deal seen to offer full repayment is likely to be well received by creditors but the fine print will be key, including the length of any extensions and payment of interest.
It is also likely that banks want to see a change in how Dubai World is run, and while the company is unlikely to welcome creditors taking a seat on the board, greater involvement from Abu Dhabi, through a stake option, might be a mutual compromise.

WHAT IF BANKS REJECT THE PLAN?
Creditors will be wary rejecting any proposal outright; several international banks have long standing relationships in the region which they will want to preserve, particularly in light of the Gulf's growth outlook.
Local banks are closely linked to the government, and may have little choice but to accept. Even in the case of a haircut, local banks may end up being recapitalised to limit damage.
If they reject its offer, creditors will force Dubai World into bankruptcy and a special tribunal related to Dubai World has been set up to hear cases.
Taking Dubai World or its units to court is seen as the least favoured outcome.

WHO ARE DUBAI WORLD'S CREDITORS?
About 97 banks are affected by Dubai World's restructuring, seven of whom - considered the most exposed - have formed an informal coordinating committee.
The committee consists of British banks HSBC, Standard Chartered, RBS and Lloyds, as well as two UAE banks, Emirates NBD and Abu Dhabi Commercial Bank.
Asian lenders are also thought to hold a sizeable proportion of exposure to Dubai World units, and Bank of Tokyo Mitsubishi, a unit of Mitsubishi UFJ Financial Group was added to the informal banks' committee in January.
China Construction Bank, another Asian heavyweight, is also baying for a bigger say in the negotiations.

WHAT HAPPENS NEXT?
The next stage in the Dubai World debt situation is to present a plan to the seven banks on the informal panel, who will then forward it to the full creditor group to consider.
Negotiations could be long and protracted.
The proposals will be pored over by risk committees and by the banks' management and board of directors and negotiations will commence.
If anything less than full repayment is proposed, then a formal creditor committee may be formed which could include more or fewer banks, and different banks to the current panel.

(Reporting by Rachna Uppal; Editing by Hans Peters) Keywords: EMIRATES DEBT/Q+A (rachna.uppal@thomsonreuters.com; +971 4 391 8301; Reuters Messaging: rachna.uppal.reuters.com@reuters.net)

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Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.

By Stanley Carvalho

ABU DHABI, March 19 (Reuters) - Dubai's bid to repay billions in debt hinges on aid from Abu Dhabi, but the wealthy emirate will be torn between helping its debt-ridden neighbour and advancing its own ambitions.
An internal debate in Abu Dhabi about how much support to provide Dubai -- or whether to just let the flashier Gulf Arab emirate flounder -- and what the emirate wants to achieve through its assistance has been a factor in debt talks, people familiar with the matter said.
Dubai said in November it will delay repaying some $26 billion in debt, linked mainly to flagship conglomerate Dubai World's property units Limitless and Nakheel as it restructures.
Dubai has little oil wealth and funded its transformation into a regional tourism and finance hub on the back of massive debts. But the Gulf Arab emirate, renowned for extravagant real estate projects such as man-made islands shaped like palms, has insufficient resources to repay.
"The old camp may not have wanted Abu Dhabi to lend too much of a helping hand ... but they also would not want Abu Dhabi to take over any assets of Dubai," said a long-time Abu Dhabi observer who asked not to be identified.
"But the younger lot think differently. They like the Dubai model and even are emulating it in some ways. They don't mind mergers and a closer cooperation with Dubai."
Abu Dhabi, the biggest and richest of the United Arab Emirates federation, plays a pivotal role at the federal level.
"There will be support, not carte blanche, from Abu Dhabi on the table," said an Abu Dhabi-based Emarati businessman who spoke on condition of anonymity.
"We think Abu Dhabi is waiting for details from Dubai on its debt, total amount, creditors, how it is being restructured."
An Abu Dhabi finance department official declined comment.

A last-minute intervention by the emirate helped Dubai stave off a default linked to Nakheel in December. But Abu Dhabi's $10 billion in aid -- including $5 billion in bonds placed with Abu Dhabi-linked banks -- came on condition Dubai reach a satisfactory agreement with creditors.
Dubai has yet to draw about $4.9 billion of those funds.
"As the capital with more than 90 percent of the country's oil, Abu Dhabi is duty bound to render financial support prudently up to a point," said an Abu Dhabi-based executive at a business group. "(But) Abu Dhabi does not want to squander away its well-saved earnings rescuing debt burdened emirates, beyond a point.
"After all, Abu Dhabi has to finance its own ambitious, mega multi-billion dirhams projects."
Abu Dhabi has branched out from oil to position itself as a tourist hub, albeit a more staid one than Dubai, with its own airline Etihad which competes with Dubai's Emirates.
Meanwhile Dubai is in talks with a seven-member creditor committee made up of UK and local banks plus a Japanese lender.
A final proposal, expected next week, is seen including more than two tranches including repayment over three to five years with the principal discounted, and repayment over seven to nine years with no discount.
"The larger dynamic at play is, of course Abu Dhabi doesn't act in unison," said Khuram Maqsood, managing director of Emirates Capital in Dubai. "There are pockets within Abu Dhabi who are of the view that 'let Dubai struggle and figure out a solution which they can afford'.
"Then there's the other, which I think is the view that counts among other parties, which is that if Dubai is struggling, then Abu Dhabi is struggling.
"If Dubai credit goes down, or they experience default or there's investor confidence issues with Dubai, it impacts ... the UAE as a whole."
Dubai World, which ringfenced key assets like ports operator DP World from the restructuring, has been in talks with a panel made up of Standard Chartered, HSBC, Lloyds, Royal Bank of Scotland, Emirates NBD and Abu Dhabi Commercial Bank, which are believed to have two-thirds of total exposure.
Bank of Tokyo-Mitsubishi, a unit of Mitsubishi UFJ Financial Group, joined the panel this year.
(Writing by Amran Abocar; Editing by David Holmes) Keywords: EMIRATES DEBT/ Keywords: EMIRATES DEBT/

(stanley.carvalho@thomsonreuters.com; +971 2 644 4431; Reuters Messaging: stanley.carvalho.reuters.com@reuters.net)

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Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.