Dubai World, the investment conglomerate of the United Arab Emirates city-state in the middle of credit turmoil, may sell some assets in the UAE and abroad to meet its debt obligations, a senior government official said on Monday.
Dubai World said last week that it would default on its debt. Currently, it is working with creditors to restructure $26 billion in bonds and notes, including a $3.5 billion Islamic bond sold by its real estate arm Nakheel.
Dubai’s Finance Department Director Abdul Rahman al-Saleh, in an interview with Al Jazeera television posted to its Web site, said that asset sales are normal business procedures to shore up capital. Al-Saleh did not elaborate on which assets would be sold.
"It is premature to announce any plans now, but the main goal is that Dubai World will continue in the future as a company with a new framework to face challenges," al-Saleh said in the interview.
Dubai’s Finance Department is leading the restructuring efforts at Dubai World, the investment arm of the government. Dubai has emphasized that any asset sales would come from the assets of the company, not of the Dubai government.
Dubai World had previously maintained that asset sales were unnecessary.
Dubai World has many valuable assets, including DP World Ltd., the world’s fourth-largest port operator, luxury retailer Barney’s of New York, and the acrobatic and stage-performance franchise Cirque du Soleil. DP World caused a political storm in the United States when it tried to take over six U.S. ports.
Al-Saleh said that ultimately, the restructuring efforts would lead to the company’s survival in this tough credit environment. All projects not yet started would also be put on hold.
Dubai has become the Middle Eastern hub of finance and real estate due to a recent housing boom. But the global real estate bubble burst and left the city-state’s real estate sector in ruins, even as it prepares to open the world’s tallest skyscraper, the Burj Dubai this month.