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
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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
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