Dubai World restructures its $25B debt

Mar 28, 2011 8:19 PM

After months of negotiations, Dubai World, the conglomerate arm of Dubai, a member of the United Arab Emirates, has finalized an agreement with its creditors to restructure nearly $25 billion of debt.

A tentative agreement was reached last year and was formalized last week, thus closing a key chapter in Dubai’s effort to get its financial house in order.

The news certainly was appreciated by MGM Resorts International (MGM) since Dubai World holds nearly 10 percent of the company’s stock and is a 50 percent partner in CityCenter. It was the summer of 2007 when Dubai World bought 14.55 million shares of MGM at $84 per share. Dubai World also paid $2.96 billion for its half of the major Las Vegas Strip development.

Like so many other companies, Dubai World ran into financial trouble with the global credit crisis. The company’s affiliates include the global port operator DP World and the developer Nakheel, the builder of manmade islands off Dubai’s coast.

"Dubai World has now moved into a new phase of growth," said Sheik Ahmed bin Saeed Al Maktoum, the company’s chairman. "The agreement reached is also a demonstration of Dubai’s ability to overcome the effects of the global financial crisis."