Monday, December 14, 2009

Dubai: Abu Dhabi steps in to help Dubai with a $US10 billion bailout

China Daily reports Dubai's government said Monday it has received $10 billion in emergency funds from its oil-rich neighbor Abu Dhabi that will help pay debts owed by the struggling Dubai World conglomerate.

State-owned Dubai World had been up against a Monday deadline to repay a pile of debt from its Nakheel property division. Some $4.1 billion of the bailout money will be used to pay off those bills.

Dubai's ability to repay that debt had been seen as a key test of the emirate's creditworthiness.

"We are here today to reassure investors, financial and trade creditors, employees and our citizens that our government will act at all times in accordance with market principles and internationally accepted business practices," Sheik Ahmed bin Saeed Al Maktoum, chairman of the Dubai supreme fiscal committee, said in a statement. "Our best days are yet to come."

The debt-laden emirate said the rest of the funds provided by Abu Dhabi will be used to cover Dubai World's interest expenses and general business needs through the end of April, and to pay bills owed to "existing trade creditors and contractors."

Published by i On Global Trends - Mike Hitchen Online - news, opinion, analysis
See also Sydney Irresistible and Mike Hitchen Unleashed
Putting principles before profits
Blog will be on holiday Dec 23 - Jan 04 (Sydney time)