The government of Dubai is to inject up to £6.4bn into troubled conglomerate Dubai World in a bid to restructure the company’s debts.
State-owned Dubai World manages assets across a wide range of industries and key subsidiaries include property arm Nakheel, which built the Palm Islands resort, and DP World, which owns more than 50 ports around the globe including London Gateway, Tilbury and Southampton in the UK.
The company stunned global markets in November last year when it asked for a six-month delay on debt repayments.
The chairman of the emirate’s supreme fiscal committee said the funding aims to ensure Dubai World and Nakheel are “key contributors to the strong economic future” of the city-state.
Sheikh Ahmed bin Saeed Al Maktoum, who is also the uncle of Dubai’s ruler, said the new funding will include £3.8bn of the remaining funds from a bailout by neighbouring Abu Dhabi and “internal Dubai government resources”.
Dubai’s government said it plans to ask all its creditors to agree to restructure their Dubai World loans. As part of that deal, the government plans to recapitalise the conglomerate by offering as equity a £6bn claim in the company, while also pumping in £1bn in new funds, according to the statement.
Sheik Ahmed made clear that Nakheel, whose future has been in doubt, remained a core part of Dubai’s economy.
“The Nakheel business plan allows work to continue as soon as possible and puts Nakheel on a sound footing. The government, as shareholder, will work closely with Nakheel so that any future projects are carefully planned and evaluated,” he said in a statement.