Tuesday, September 7, 2010

Dubai World: Offering “الطيور المبكرة” an Extra 20 BP on Interest Rate

According to AlKhaleej newspaper (Dubai), informed sources at Dubai World tell it that DW is offering   “الطيور المبكرة” ("early birds") an extra 20 basis points on interest if they accept the Company's rescheduling plan this Thursday 9 September.  This is in addition to other incentives offered early acceptors - which presumably includes the signing "bonuses" mentioned earlier.

The 9th is the first day for creditor responses but is not the last - though the newspaper's source didn't provide details except to say the final date is in the coming weeks.  Earlier DW had given 1 October as the "final" date to determine the fate of the plan - which would put the last date for acceptance by bankers at least 5 or so days earlier.  That latter bit is my estimate.

The article also repeats the Company's earlier comments about how the longer tenors will enable it to obtain more from asset sales along with the remark (threat) that in the case the banks fail to agree and resort to the courts they will likely receive nothing.  Finally, the agreement of the steering committee representing 60% of DW's exposure is noted.  Already the earliest of the early birds.

It's likely that the Company will achieve the necessary level of approval to secure an effective cram down of creditors using the special DIFC court.  

And what appears to be the long running "soap opera" of agreeing a rescheduling will come to an end, though there will be at least 8 more seasons of implementation.  Not quite a 54 years' run, but still respectable particularly in today's ADD world.

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