The National reports that lenders foreclosed on Istithmar World's Union Square Hotel in New York City. This is related to problems with debt service at the hotel. It is not directly related to any problems at the parent, Dubai World.
However, as funds available to Dubai World become more scarce, it will not be able to provide funds to its subsidiaries.
Lenders to standalone projects like the hotel are likely to react to the commercial circumstances of each transaction. If the equity holder is unwilling or unable to provide additional funding and if it makes sense to foreclose, they will. Since many of these deals are structured as separate legal entities, they can easily do so. The assets are to use a term popular in the financial press these days "ring fenced".
This puts more pressure on Dubai World.
As the market denies it new lending, it will need to husband cash to prevent problems like this from occurring, presuming it makes commercial sense to support a project.
And such a need could possibly be a motive to compel them to seek a wider restructuring than just Nakheel and Limitless.
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