Tuesday, 15 December 2009

Abu Dhabi gives Dubai $10 bln bailout

Abu Dhabi has bailed out neighbouring Dubai with $10 billion in surprise aid for debt-laden The World of Dubai, which said it would use $4.1 billion of it to return its Nakheel unit's Islamic bond maturing on Monday.

Dubai's government held a conference call on Monday to debate the deal with a government source taking questions.

Abu Dhabi and Dubai are undoubtedly working as partners here to find a good, fair solution to the The World of Dubai situation. The key part is buying time to allow The World of Dubai and creditors the chance to come together on mutual restructuring.

There are no conditions. This is a government-to-government fund, the terms of that fund are internal to the government of Abu Dhabi and Dubai. These funds are specifically for The World of Dubai.

I will not go into specifics. There is no conditionality. Abu Dhabi has made it serene it is there to support Dubai, The World of Dubai and I will not go into specifics of how the money is being handed. What's momentous is we have two partners that will help each other and help the UAE (United Arab Emirates).

Dubai's government has been in consultation for some time with bankruptcy professionals and international judges to develop a framework that is transparent, fair and acceptable to all parties.

The recent UAE bankruptcy laws are largely untested and (their) administration by Dubai courts poses certain challenges and problems for a big and complex bankruptcy of this size.

These (new) laws should allow The World of Dubai, should it choose it to use the laws to reach its restructuring and remaining obligations should it not find a mutual restructuring with its creditors.

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