istithmar-world

Dubai World Removes Private Equity CEO Jackson as Company Refinances Debt

by on January 20, 2010

By Haris Anwar Jan. 20 (Bloomberg) — Dubai World replaced the chief executive officer of its private equity unit Istithmar World, the owner of luxury retailer Barneys New York, as the state- owned company seeks to renegotiate about $22 billion of debt. David Jackson was replaced by Istithmar’s chief investment officer Andy Watson , who was appointed acting chief executive with immediate effect, Dubai World said today in an e-mailed statement. Watson is a former director at Barclays Capital. “Dubai World is cleaning house and signaling to investors that it’s making difficult decisions and responding to their criticisms,” said Louis Gargour , the chief investment officer at hedge fund LNG Capital LLP in London. “Dubai World may sell some of its non-core assets. We believe that they will resist selling them or any assets for that matter at 50 cents on a dollar.” Istithmar and Dubai World struggled last year on investments including Barneys and CityCenter, an $11 billion project in Las Vegas. Istithmar bought Barneys in 2007 for $942.3 million. Abu Dhabi, the wealthiest member of the United Arab Emirates, provided a $20 billion bailout in 2009 for Dubai as the emirate ran into difficulties meeting payments on debt used to finance real-estate projects. ‘Maximize Value’ Debt from subsidiaries including Istithmar World, Infinity World Holding and Ports & Free Zone World will be excluded from the negotiations as these companies are on “a stable financial footing,” Dubai World said on Dec. 1. “Today, Istithmar World is focused on the steady-state management of existing assets to maximize value rather than on private equity investment,” Dubai World’s Chief Restructuring Officer Aidan Birkett said in today’s statement. As recently as October, Jackson told CNBC that Istithmar was making “small bolt-on acquisitions.” “We still see positive prospects,” Jackson said in the Oct. 23 interview. “I’m not going anywhere.” Dubai, the second-biggest of seven states that make up the U.A.E., and its state-owned companies borrowed at least $80 billion until 2008 to transform the emirate into a tourism and financial hub. The seizure of debt markets after the onset of the global credit crisis led to a 50 percent decline in property prices in the city and hampered the ability of Dubai-based companies to raise new loans to refinance maturing debt. New York Jackson became Istithmar’s CEO in 2006 and spearheaded the company’s drive to expand its portfolio. Istithmar spent at least $16.4 billion on publicly reported investments this decade, according to the Monitor-FEEM SWF transaction database. Among its investments are Yacht Haven Grande, a marina complex in the Caribbean, the W Hotel Union Square in New York and GLG Partners Inc., a hedge fund. Istithmar may halt investments as part of a restructuring effort that may result in a sale of the fund or its assets, people familiar with the plan said in September. The company’s co-chief investment officers John Amato and Felix Herlihy left the firm the same month. “Avoiding sales and restructuring maturities still seems to be the best way out for them,” Gargour said. ”A further large cash injection is likely and the best outcome for the regions reputation and solvency looking forward.” To contact the reporters on this story: Haris Anwar in Dubai on Hanwar2@bloomberg.net Arif Sharif in Dubai at asharif2@bloomberg.net

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Dubai World Removes Private Equity CEO Jackson as Company Refinances Debt

Dubai World May Not Offer Standstill Terms at Meeting Today, Bankers Say

by on December 20, 2009

Bloomberg:

By Arif Sharif and Vivian Salama Dec. 21 (Bloomberg) — Dubai World, which is seeking to restructure about $22 billion of debt, may be unable to present a “standstill” offer to lenders today as the terms of government support for the state-owned holding company have yet to be agreed, two bankers involved in the talks said. The complexity of Dubai World Group and its funding structure are to blame for the delay, one banker said, citing a Dec. 18 letter from the company’s Chief Restructuring Officer Aidan Birkett about the agenda for the meeting with creditors. The meeting is unlikely to be substantive and will focus on information sharing, another banker said. Both declined to be identified because the discussions are private. A spokesman for Dubai World would not to comment. Dubai World, one of the emirate’s three main state-owned business groups, announced Nov. 25 it would seek to freeze or delay repaying debt until at least May 30. The company said Dec. 1 it wants to alter terms on about $26 billion of debt, including of property unit Nakheel PJSC, which is building palm tree-shaped islands off the emirate’s coast. It repaid $4.1 billion on an Islamic bond from Nakheel last week after Dubai received a $10 billion loan from Abu Dhabi. “This will certainly have a negative effect on markets,” said Fadi Al Said , head of equities at ING Investment Management (Dubai) Ltd. by telephone from Jordan. “With the amount of debt involved these discussions are going to take some time, like they did in the case of Global Investment in Kuwait,” he said. Global Investment Global Investment House KSCC , the investment bank that defaulted on loan repayments at the end of last year, said Dec. 10 it signed an agreement with its creditors to restructure $1.73 billion of debt. Global entered into new three-year amortizing facilities with each of its 53 lending banks, thus ending the “events of default,” it said in a statement. Dubai, the second-biggest of seven states that make up the United Arab Emirates, and its state-owned companies borrowed at least $80 billion until last year to transform the emirate into a tourism and financial hub. The seizure of debt markets after the onset of the global credit crisis led to a 50 percent decline in property prices in the city and hampered the ability of Dubai-based companies to raise new loans. Information Sharing Some Dubai World group companies including DP World Ltd. , the world’s fourth-biggest port operator, private equity company Istithmar World PJSC and ship repair company Drydocks World LLC, are excluded from the loan restructuring as they are on a “stable financial footing,” Dubai World has said. Today’s meeting is meant to provide banks with information on debt of Dubai World and its subsidiaries and the terms of support of the Government of Dubai, bankers said. Dubai set up a special court Dec. 14 to oversee the financial reorganization of Dubai World. The court will enable the restructuring of Dubai World “in accordance with international best practices,” it said. Debt restructuring by Dubai state-run companies may almost double to $46.7 billion as more of the emirate’s businesses could need help making payments, Morgan Stanley said earlier this month. Dubai Holding LLC, Dubai Holding Commercial Operations Group LLC, Borse Dubai Ltd. and Dubai Sukuk Center Ltd. may join Dubai World in restructuring debt, Morgan Stanley analysts Mohamed W. Jaber and Paolo Batori wrote in the report. Dubai set up a financial support fund earlier this year to help state-related companies facing problems raising cash amid the credit crisis. It raised $10 billion for the fund in February by selling bonds to the U.A.E. central bank and another $5 billion in November through a bond sale to Abu Dhabi government-controlled banks. Dubai World said Nov. 30 that its restructuring would be carried out over several phases and include an assessment of deleveraging options, “including assets sales.” To contact the reporter on this story: Vivian Salama in Dubai vsalama@bloomberg.net Arif Sharif in Dubai at asharif2@bloomberg.net

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Dubai World May Not Offer Standstill Terms at Meeting Today, Bankers Say

Dubai World Unit Loses Control of W New York Union Square Hotel at Auction

December 8, 2009

By Nadja Brandt and Jonathan Keehner Dec. 8 (Bloomberg) — Dubai World’s Istithmar unit lost control of the W New York Union Square hotel in a foreclosure auction after investing in the property near the top of the real estate market. LEM, an affiliate of Lubert-Adler Real Estate Funds, won an auction for the mezzanine debt on the luxury Manhattan hotel, which was purchased by Istithmar in 2006 for $285 million. LEM bid $2 million for the debt. “We are pleased to have completed this step to assume ownership of the W New York Union Square,” the acquirers said in a statement today. “Despite the recent downturn of the hotel industry, and the defaults that led to today’s foreclosure auction, we are optimistic about the future. Our intention is to ensure a seamless transition of ownership.” State-owned Dubai World is seeking a “standstill” agreement with lenders as it attempts to restructure $26 billion of debt. Istithmar shelled out $665 million for two New York hotels, the W Union Square and the Mandarin Oriental, whose sale prices each broke a local record of $1 million per guest room, according to Real Capital Analytics Inc. The mezzanine debt on the W New York, named by Conde Nast Traveler as one of the world’s top 500 hotels in 2005, was divided into three parts with LEM holding one portion, according to Ben Thypin, senior market analyst at Real Capital, a New York- based research firm. Switching Places LEM bought out the other holders of the debt and assumed control of the entire loan, he said. LEM will now take over mortgage payments on the $115 million backed by the hotel and “essentially switch places with Istithmar,” Thypin said. LEM Mezzanine, based in Philadelphia, is a series of private equity funds with $450 million of equity, according to its Web site. “LEM has very little equity in the deal, so essentially the property is just moving into different hands,” said Thypin, after the auction. “They may be more willing to recapitalize it or somehow improve operations but it’s not moving out of trouble. The hotel still has to improve its performance.” Luxury hotels have been hurt by a decline in business and leisure travel during the recession. A drop in room rates at the W Union Square has cut its net cash flow, according to data compiled by credit-rating company Realpoint LLC . Dubai Loans Lenders have poured more than $100 billion into Dubai, at least $34 billion of which went to Dubai World, according the Moody’s Investors Service. Dubai World said on Nov. 30 said it is considering selling off assets as part of a restructuring. “As Istithmar World has demonstrated repeatedly throughout the financial crisis, we have stood by the investments in our portfolio,” Istithmar spokesman Abdelaziz Al Mazam said Nov. 18 in response to questions about debt on the W Union Square. “As signs have begun that the global economy is recovering, we expect to continue to do so with increased confidence.” The results were announced at the auction in Manhattan. To contact the reporters on this story: Nadja Brandt in Los Angeles at nbrandt@bloomberg.net ; Jonathan Keehner in New York at jkeehner@bloomberg.net .

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Dubai’s Sheikh Mohammed Tightens Control of Investment Arm With New Board

November 21, 2009

By Henry Meyer Nov. 21 (Bloomberg) — Dubai ruler Sheikh Mohammed Bin Rashid Al-Maktoum tightened his family’s control of the emirate’s largest holding company, the Investment Corporation of Dubai. A decree posted Nov. 19 on Sheikh Mohammed’s Web site listed six members of a new board. It didn’t include Mohammad al-Gergawi , Sultan Ahmed Bin Sulayem or Mohammed Ali Alabbar , three key business aides of the Dubai ruler who are currently named as directors on the investment body’s Web site . Al-Gergawi, Bin Sulayem and Alabbar were at the forefront of a debt-driven building boom in Dubai that collapsed after the onset of the global financial crisis last year. Dubai, the second-biggest of seven states that make up the United Arab Emirates, and its government-owned companies borrowed $80 billion to finance the emirate’s transformation into a financial and tourist hub before credit markets froze. Sheikh Mohammed will continue to chair the board of the investment body. His son, Crown Prince Sheikh Hamdan bin Mohammed bin Rashid Al-Maktoum, is the deputy chairman. Other members of the board, which will serve for three years, include Sheikh Ahmed bin Saeed Al-Maktoum, Sheikh Mohammed’s uncle, who is chairman of Emirates Airline. ‘Monopolization of Power’ “We’re seeing a monopolization of power by the ruler’s court,” said Christopher Davidson , a Middle Eastern studies professor at Durham University in the U.K. and author of the 2008 book “Dubai: The Vulnerability of Success.” “Sheikh Mohammed entrusted a section of the Dubai economy to these powerful captains of industry and he feels they let him down.” Bin Sulayem is chairman of Dubai World, a state-run holding company that controls port operator DP World Ltd., property developer Nakheel PJSC and asset management firm Istithmar World PJSC. It has about $59 billion of debt and other liabilities. Al-Gergawi is chairman of Dubai Holding, which owns developers including Dubai Properties, Tatweer and Sama Dubai. Alabbar is chairman of Emaar Properties PJSC . The reshuffle of the investment holding company follows a move earlier this month by Sheikh Mohammed to take direct control of the emirate’s planning and supervisory agency, as the government tightens scrutiny of indebted state companies. The agency, known as the Executive Office, set up in 2006, will now operate under Sheikh Mohammed’s court, according to a Nov. 4 statement. The Investment Corporation of Dubai will take control of Dubai Duty Free under the Nov. 19 decree. It already controls assets including Emaar, the U.A.E.’s biggest developer, Emirates Airline, Emirates NBD bank and Dubai Aluminium Co., the largest smelter in the Middle East. To contact the reporter on this story: Henry Meyer in Dubai at hmeyer4@bloomberg.net .

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